| Delaware (State or other jurisdiction of incorporation or organization) | | | 6311 (Primary Standard Industrial Classification Code Number) | | | 20-0362426 (I.R.S. Employer Identification Number) | |
| Large accelerated filer ☐ | | | Accelerated filer ☐ | |
| Non-accelerated filer ☐ (Do not check if a smaller reporting company) | | | Smaller reporting company ☒ | |
| | | | Emerging growth company ☐ | |
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Title of each class of securities to be registered | | | | Proposed maximum aggregate offering price(1)(2) | | | | Amount of registration fee(3) | | |||
Voting Common Stock, $0.001 par value per share | | | | $50,000,000 | | | | | $ | 5,455 | | |
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Public offering price | | | | $ | | | | | $ | | | ||
Underwriting discounts and commissions(1) | | | | $ | | | | | $ | | | ||
Proceeds to Midwest, before expenses | | | | $ | | | | | $ | | | |
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Annuity Direct Written Premium (SAP) | | ||||||||||||||||||||||||||||||
($ in millions) | | ||||||||||||||||||||||||||||||
| | | 2018 | | | 2019 | | | LTM 6/30/20 | | | YTD 6/30/19 | | | YTD 6/30/20 | | |||||||||||||||
Annuity Direct Written Premium | | | | $ | 0.0 | | | | | $ | 161.4 | | | | | $ | 270.6 | | | | | $ | 38.2 | | | | | $ | 147.4 | | |
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| | Six Months Ended June 30, | | Fiscal Year Ended December 31, | | | Nine Months Ended September 30, | | Fiscal Year Ended December 31, | | ||||||||||||||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | 2018 | | | 2020 | | 2019 | | 2019 | | 2018 | | ||||||||||||||||||||||||||||||||
| | (in thousands except per share amounts) | | (in thousands except per share amounts) | | | (in thousands except per share amounts) | | (in thousands except per share amounts) | | ||||||||||||||||||||||||||||||||||||||||
Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Amount of deferred gain on reinsurance | | | $ | 521 | | | | $ | 1,853 | | | | $ | 2,644 | | | | $ | 118 | | | | | $ | 814 | | | | $ | 2,466 | | | | $ | 2,644 | | | | $ | 118 | | | ||||||||
Realized gains (losses) | | | | 9,780 | | | | | (3) | | | | | 354 | | | | | 48 | | | |||||||||||||||||||||||||||||
Realized gains | | | | 7,829 | | | | | 9 | | | | | 354 | | | | | 48 | | | |||||||||||||||||||||||||||||
Investment income | | | | 843 | | | | | 639 | | | | | 121 | | | | | 516 | | | | | | 1,277 | | | | | 331 | | | | | 121 | | | | | 516 | | | ||||||||
Other | | | | 786 | | | | | 79 | | | | | 281 | | | | | 194 | | | | | | 1,494 | | | | | 214 | | | | | 281 | | | | | 194 | | | ||||||||
Total revenues | | | | 11,930 | | | | | 2,568 | | | | | 3,400 | | | | | 876 | | | | | | 11,414 | | | | | 3,020 | | | | | 3,400 | | | | | 876 | | | ||||||||
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Salaries and benefits | | | | 2,180 | | | | | 1,115 | | | | | 2,702 | | | | | 2,161 | | | | | | 3,624 | | | | | 1,783 | | | | | 2,702 | | | | | 2,161 | | | ||||||||
Other operational expenses | | | | 3,852 | | | | | 3,780 | | | | | 6,073 | | | | | 3,752 | | | | | | 6,171 | | | | | 5,065 | | | | | 6,073 | | | | | 3,752 | | | ||||||||
Total expenses | | | | 6,032 | | | | | 4,895 | | | | | 8,775 | | | | | 5,913 | | | | | | 9,795 | | | | | 6,848 | | | | | 8,775 | | | | | 5,913 | | | ||||||||
Pre-tax income (loss) | | | | 1,619 | | | | | (3,828) | | | | | (5,375) | | | | | (5,037) | | | |||||||||||||||||||||||||||||
Income tax expense | | | | (887) | | | | | — | | | | | (234) | | | | | — | | | | | | (2,145) | | | | | (115) | | | | | (234) | | | | | — | | | ||||||||
Loss from discontinued operations | | | | — | | | | | — | | | | | — | | | | | (29) | | | | | | — | | | | | — | | | | | — | | | | | (29) | | | ||||||||
Net (loss) income | | | $ | 5,011 | | | | $ | (2,327) | | | | $ | (5,609) | | | | $ | (5,066) | | | |||||||||||||||||||||||||||||
Net (loss) income per common share | | | $ | 0.004 | | | | $ | (0.02) | | | | $ | (0.01) | | | | $ | (0.22) | | | |||||||||||||||||||||||||||||
Net loss | | | $ | (526) | | | | $ | (3,943) | | | | $ | (5,609) | | | | $ | (5,066) | | | |||||||||||||||||||||||||||||
Net loss per common share | | | $ | (0.22) | | | | $ | (4.71) | | | | $ | (4.99) | | | | $ | (121.77) | | |
| | September 30, 2020 | | December 31, 2019 | | |||||||||||||||||||||
| | June 30, 2020 | | December 31, 2019 | | | (in thousands) | | (in thousands) | | ||||||||||||||||
Investments available for sale | | | $ | 200,110 | | | | $ | 117,242 | | | | | $ | 250,543 | | | | $ | 117,242 | | | ||||
Mortgage loans | | | | 51,172 | | | | | 13,810 | | | | | | 61,465 | | | | | 13,810 | | | ||||
Notes receivable | | | | 5,488 | | | | | — | | | | | | 5,516 | | | | | — | | | ||||
Other | | | | 6,461 | | | | | 7,550 | | | | | | 22,620 | | | | | 7,550 | | | ||||
Total investments | | | | 263,231 | | | | | 138,602 | | | | | | 340,144 | | | | | 138,602 | | | ||||
Cash and equivalents | | | | 75,042 | | | | | 43,716 | | | | | | 136,432 | | | | | 43,716 | | | ||||
Reinsurance recoverables | | | | 43,356 | | | | | 30,580 | | | | | | 42,091 | | | | | 30,580 | | | ||||
Other | | | | 14,081 | | | | | 7,020 | | | | | | 17,982 | | | | | 7,018 | | | ||||
Total assets | | | | 395,709 | | | | | 219,916 | | | | | | 536,649 | | | | | 219,916 | | | ||||
Benefit reserves | | | | 16,435 | | | | | 16,320 | | | | | | 16,434 | | | | | 16,320 | | | ||||
Deposit type contracts | | | | 321,831 | | | | | 171,169 | | | | | | 455,429 | | | | | 171,169 | | | ||||
Deferred gains on reinsurance | | | | 11,487 | | | | | 7,578 | | | | | | 15,739 | | | | | 7,578 | | | ||||
Other | | | | 20,003 | | | | | 10,690 | | | | | | 23,969 | | | | | 10,690 | | | ||||
Total liabilities | | | | 369,756 | | | | | 205,757 | | | | | | 511,571 | | | | | 205,757 | | | ||||
Total stockholders’ equity | | | $ | 25,953 | | | | $ | 14,159 | | | |||||||||||||||
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| | | September 30, 2020 | | | December 31, 2019 | | ||||||
| | | (in thousands) | | | (in thousands) | | ||||||
Total stockholders’ equity | | | | $ | 25,078 | | | | | $ | 14,159 | | |
| | Six Months Ended June 30, | | Year Ended December 31, | | | Nine Months Ended September 30, | | Year Ended December 31, | | ||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | | 2020 | | 2019 | | 2019 | | ||||||||||||||||||||||||
Annuity Premiums (SAP) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Annuity direct written premiums | | | $ | 147,486,013 | | | | $ | 38,238,880 | | | | $ | 161,364,568 | | | ||||||||||||||||||||||
Annuity Direct written premiums | | | $ | 279,537,158 | | | | $ | 79,500,172 | | | | $ | 161,364,568 | | | ||||||||||||||||||||||
Ceded premiums | | | | (118,987,891) | | | | | — | | | | | (160,493,727) | | | | | | (177,979,450) | | | | | (75,439,664) | | | | | (160,493,727) | | | ||||||
Net premiums retained | | | $ | 28,498,122 | | | | $ | 38,238,888 | | | | $ | 870,841 | | | | | $ | 101,557,708 | | | | $ | 4,060,508 | | | | $ | 870,841 | | |
| | Six Months Ended June 30, | | Year Ended December 31, | | | Nine Months Ended September 30, | | Year Ended December 31, | | ||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | | 2020 | | 2019 | | 2019 | | ||||||||||||||||||||||||
Total revenue – GAAP | | | $ | 11,930,138 | | | | $ | 2,568,248 | | | | $ | 3,399,788 | | | | | $ | 11,413,881 | | | | $ | 3,020,384 | | | | $ | 3,399,788 | | | ||||||
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Net realized (gains) losses on investments | | | | (8,472,037) | | | | | — | | | | | — | | | | | | (4,369,562) | | | | | — | | | | | — | | | ||||||
Deferred coinsurance ceding commission | | | | 3,908,889 | | | | | (1,838,878) | | | | | 3,678,196 | | | | | | 8,161,069 | | | | | 2,821,255 | | | | | 3,678,196 | | | ||||||
Adjusted revenue | | | $ | 7,366,990 | | | | $ | 729,370 | | | | $ | 7,077,984 | | | | | $ | 15,205,388 | | | | $ | 5,841,639 | | | | $ | 7,077,984 | | |
| | Six Months Ended June 30, | | Year Ended December 31, | | | Nine Months Ended September 30, | | Year Ended December 31, | | ||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | | 2020 | | 2019 | | 2019 | | ||||||||||||||||||||||||
Net (loss) income attributable to Midwest Holding Inc. – GAAP | | | $ | 5,011,119 | | | | $ | (2,326,870) | | | | $ | (5,733,658) | | | ||||||||||||||||||||||
Net loss attributable to Midwest Holding Inc. – GAAP | | | $ | (526,123) | | | | $ | (3,989,684) | | | | $ | (5,733,658) | | | ||||||||||||||||||||||
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Net realized (gains) losses on investments | | | | (8,472,037) | | | | | — | | | | | — | | | ||||||||||||||||||||||
Net realized gains on investments | | | | (4,369,562) | | | | | — | | | | | — | | | ||||||||||||||||||||||
Deferred coinsurance ceding commission | | | | 3,908,889 | | | | | (1,838,878) | | | | | 3,678,196 | | | | | | 8,161,069 | | | | | 2,821,255 | | | | | 3,678,196 | | | ||||||
Total adjustments | | | | (4,563,148) | | | | | (1,838,878) | | | | | 3,678,196 | | | | | | 3,791,507 | | | | | 2,821,255 | | | | | 3,678,196 | | | ||||||
Income tax (expense) benefit adjustment(1) | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | ||||||
Adjusted net (loss) income | | | $ | 447,971 | | | | $ | (4,165,748) | | | | $ | (2,055,462) | | | | | $ | 3,265,384 | | | | $ | (1,168,429) | | | | $ | (2,055,462) | | |
| | Actual at June 30, 2020 (unaudited) | | As Adjusted at June 30, 2020 (unaudited) | | | Actual at September 30, 2020 (unaudited) | | As Adjusted at September 30, 2020 (unaudited) | | ||||||||||||||||
Long term debt | | | $ | — | | | | $ | — | | | | | $ | — | | | | $ | — | | | ||||
Stockholders’ equity | | | | | | | | | | | | | | | | | | | | | | | ||||
Preferred stock, $0.001 par value; 2,000,000 shares authorized; no shares issued and outstanding | | | | — | | | | | — | | | | | | — | | | | | — | | | ||||
Voting common stock, $0.001 par value; 20,000,000 shares authorized; 2,718,967 shares issued before the offering ( shares pro forma)(2); 2,000,000 non-voting common stock authorized; no non-voting common shares outstanding | | | | 2,719 | | | | | | | | |||||||||||||||
Voting common stock, $0.001 par value; 20,000,000 shares authorized; 2,718,967 shares issued before the offering ( shares pro forma)(1); 2,000,000 non-voting common stock authorized; no non-voting common shares outstanding | | | | 2,719 | | | | | | | | |||||||||||||||
Additional paid in capital | | | | 69,084,710 | | | | | | | | | | | 69,114,515 | | | | | | | | ||||
Treasury stock | | | | (175,333) | | | | | | | | |||||||||||||||
Accumulated deficit | | | | (36,070,591) | | | | | | | | | | | (41,607,833) | | | | | | | | ||||
Accumulated other comprehensive loss | | | | (7,064,120) | | | | | | | | | | | (2,255,905) | | | | | | | | ||||
Total stockholders’ equity | | | | 25,952,718 | | | | | | | | | | | 25,078,163 | | | | | | | | ||||
Total capitalization | | | $ | 25,952,718 | | | | $ | | | | | | $ | 25,078,163 | | | | $ | | | |
| Public offering price per share | | | | | | | | | | $ | | | |
| Net tangible book value per share as of | | | | $ | | | | | | | | | |
| Increase in net tangible book value per share attributable to investors participating in this offering | | | | | | | | | | | | | |
| As adjusted net tangible book value per share after giving effect to this offering | | | | | | | | | | | | | |
| Dilution per share to investors in this offering | | | | | | | | | | $ | | |
| | Six Months Ended June 30, | | Fiscal Year Ended December 31, | | | Nine Months Ended September 30, | | Fiscal Year Ended December 31, | | ||||||||||||||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | 2018 | | | 2020 | | 2019 | | 2019 | | 2018 | | ||||||||||||||||||||||||||||||||
| | (in thousands except per share amounts) (unaudited) | | (in thousands except per share amounts) | | | (in thousands except per share amounts) (unaudited) | | (in thousands except per share amounts) | | ||||||||||||||||||||||||||||||||||||||||
Revenues: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Amount of deferred gain on reinsurance | | | $ | 521 | | | | $ | 1,853 | | | | $ | 2,644 | | | | $ | 118 | | | | | $ | 814 | | | | $ | 2,466 | | | | $ | 2,644 | | | | $ | 118 | | | ||||||||
Realized gains (losses) | | | | 9,780 | | | | | (3) | | | | | 354 | | | | | 48 | | | |||||||||||||||||||||||||||||
Realized gains | | | | 7,829 | | | | | 9 | | | | | 354 | | | | | 48 | | | |||||||||||||||||||||||||||||
Investment income | | | | 843 | | | | | 639 | | | | | 121 | | | | | 516 | | | | | | 1,277 | | | | | 331 | | | | | 121 | | | | | 516 | | | ||||||||
Other | | | | 786 | | | | | 79 | | | | | 281 | | | | | 194 | | | | | | 1,494 | | | | | 214 | | | | | 281 | | | | | 194 | | | ||||||||
Total revenues | | | | 11,930 | | | | | 2,568 | | | | | 3,400 | | | | | 876 | | | | | | 11,414 | | | | | 3,020 | | | | | 3,400 | | | | | 876 | | | ||||||||
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Salaries and benefits | | | | 2,180 | | | | | 1,115 | | | | | 2,702 | | | | | 2,161 | | | | | | 3,624 | | | | | 1,783 | | | | | 2,702 | | | | | 2,161 | | | ||||||||
Other operational expenses | | | | 3,852 | | | | | 3,780 | | | | | 6,073 | | | | | 3,752 | | | | | | 6,171 | | | | | 5,065 | | | | | 6,073 | | | | | 3,752 | | | ||||||||
Total expenses | | | | 6,032 | | | | | 4,895 | | | | | 8,775 | | | | | 5,913 | | | | | | 9,795 | | | | | 6,848 | | | | | 8,775 | | | | | 5,913 | | | ||||||||
Pre-tax income (loss) | | | | 1,619 | | | | | (3,828) | | | | | (5,375) | | | | | (5,037) | | | |||||||||||||||||||||||||||||
Income tax expense | | | | (887) | | | | | — | | | | | (234) | | | | | — | | | | | | (2,145) | | | | | (115) | | | | | (234) | | | | | — | | | ||||||||
Loss from discontinued operations | | | | — | | | | | — | | | | | — | | | | | (28) | | | | | | | | | | | | | | | | — | | | | | (29) | | | ||||||||
Net (loss) income | | | $ | 5,011 | | | | $ | (2,327) | | | | $ | (5,609) | | | | $ | (5,066) | | | |||||||||||||||||||||||||||||
Net (loss) income per common share | | | $ | 0.004 | | | | $ | (0.02) | | | | $ | (0.01) | | | | $ | (0.22) | | | |||||||||||||||||||||||||||||
Net loss | | | $ | (526) | | | | $ | (3,943) | | | | $ | (5,609) | | | | $ | (5,066) | | | |||||||||||||||||||||||||||||
Net loss per common share | | | $ | (0.22) | | | | $ | (4.71) | | | | $ | (4.99) | | | | $ | (121.77) | | |
| | June 30, 2020 | | December 31, 2019 | | December 31, 2018 | | | September 30, 2020 | | December 31, 2019 | | December 31, 2018 | | ||||||||||||||||||||||||
| | (unaudited) | | | | | | | | | | | | | (in thousands) | | (in thousands) | | (in thousands) | | ||||||||||||||||||
| | (in thousands) | | | (unaudited) | | | |||||||||||||||||||||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Investments available for sale | | | $ | 200,110 | | | | $ | 117,242 | | | | $ | 17,384 | | | | | $ | 250,543 | | | | $ | 117,242 | | | | $ | 17,384 | | | ||||||
Mortgage loans | | | | 51,172 | | | | | 13,810 | | | | | — | | | | | | 61,465 | | | | | 13,810 | | | | | — | | | ||||||
Notes receivable | | | | 5,488 | | | | | — | | | | | — | | | | | | 5,516 | | | | | — | | | | | — | | | ||||||
Other | | | | 6,461 | | | | | 7,550 | | | | | 44 | | | | | | 22,620 | | | | | 7,550 | | | | | 44 | | | ||||||
Total investments | | | | 263,231 | | | | | 138,602 | | | | | 17,428 | | | | | | 340,144 | | | | | 138,602 | | | | | 17,428 | | | ||||||
Cash and equivalents | | | | 75,042 | | | | | 43,716 | | | | | 2,833 | | | | | | 136,432 | | | | | 43,716 | | | | | 2,833 | | | ||||||
Reinsurance recoverables | | | | 43,356 | | | | | 30,580 | | | | | 23,101 | | | | | | 42,091 | | | | | 30,580 | | | | | 23,101 | | | ||||||
Other | | | | 14,081 | | | | | 7,020 | | | | | 40,557 | | | | | | 17,982 | | | | | 7,018 | | | | | 40,557 | | | ||||||
Total assets | | | | 395,709 | | | | | 219,916 | | | | | 66,491 | | | | | | 536,649 | | | | | 219,916 | | | | | 66,491 | | | |
| | June 30, 2020 | | December 31, 2019 | | December 31, 2018 | | | September 30, 2020 | | December 31, 2019 | | December 31, 2018 | | ||||||||||||||||||||||||
| | (unaudited) | | | | | | | | | | | | | (in thousands) | | (in thousands) | | (in thousands) | | ||||||||||||||||||
| | (in thousands) | | | (unaudited) | | | |||||||||||||||||||||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Benefit reserves | | | | 16,435 | | | | | 16,320 | | | | | 16,013 | | | | | | 16,434 | | | | | 16,320 | | | | | 16,013 | | | ||||||
Deposit type contracts | | | | 321,831 | | | | | 171,169 | | | | | 7,235 | | | | | | 455,429 | | | | | 171,169 | | | | | 7,235 | | | ||||||
Deferred gains on reinsurance | | | | 11,487 | | | | | 7,578 | | | | | 3,900 | | | | | | 15,739 | | | | | 7,578 | | | | | 3,900 | | | ||||||
Other | | | | 20,003 | | | | | 10,690 | | | | | 41,980 | | | | | | 23,969 | | | | | 10,690 | | | | | 41,980 | | | ||||||
Total liabilities | | | | 369,756 | | | | | 205,757 | | | | | 69,128 | | | | | | 511,571 | | | | | 205,757 | | | | | 69,128 | | | ||||||
Stockholders’ equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Preferred stock | | | | — | | | | | — | | | | | 1,500 | | | | | | — | | | | | — | | | | | 1,500 | | | ||||||
Common stock | | | | 1,362 | | | | | 1,023 | | | | | 23 | | | | | | 3 | | | | | 2 | | | | | — | | | ||||||
Additional paid-in capital | | | | 67,726 | | | | | 53,473 | | | | | 33,006 | | | | | | 69,114 | | | | | 54,494 | | | | | 33,029 | | | ||||||
Treasury Stock | | | | (175) | | | | | | | | | | | | | ||||||||||||||||||||||
Accumulated deficit | | | | (36,071) | | | | | (41,082) | | | | | (35,348) | | | | | | (41,608) | | | | | (41,082) | | | | | (35,348) | | | ||||||
Accumulated other comprehensive (loss) income | | | | (7,064) | | | | | 620 | | | | | (1,818) | | | | | | (2,256) | | | | | 620 | | | | | (1,818) | | | ||||||
Noncontrolling interest | | | | — | | | | | 125 | | | | | — | | | | | | — | | | | | 125 | | | | | — | | | ||||||
Total stockholders’ equity | | | $ | 25,953 | | | | $ | 14,159 | | | | $ | (4,137) | | | | | $ | 25,078 | | | | $ | 14,159 | | | | $ | (4,137) | | | |
| | Six Months Ended June 30, | | Year Ended December 31, | | | Nine Months Ended September 30, | | Year Ended December 31, | | ||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | | 2020 | | 2019 | | 2019 | | ||||||||||||||||||||||||
| | (unaudited) | | | | | | | | (unaudited) | | | | | | | ||||||||||||||||||||||
Annuity Premiums (SAP) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Annuity direct written premiums | | | | 147,486,013 | | | | | 38,238,880 | | | | $ | 161,364,568 | | | ||||||||||||||||||||||
Annuity Direct written premiums | | | | 279,537,158 | | | | | 79,500,172 | | | | $ | 161,364,568 | | | ||||||||||||||||||||||
Ceded written premiums | | | | (118,987,891) | | | | | — | | | | | (160,493,727) | | | | | | (177,979,450) | | | | | (75,439,664) | | | | | (160,493,727) | | | ||||||
Net written premiums retained | | | $ | 28,498,122 | | | | $ | 38,238,880 | | | | $ | 870,841 | | | | | $ | 101,557,708 | | | | $ | 4,060,508 | | | | $ | 870,841 | | |
| | Six Months Ended June 30, | | Year Ended December 31, | | | Nine Months Ended September 30, | | Year Ended December 31, | | ||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | | 2020 | | 2019 | | 2019 | | ||||||||||||||||||||||||
| | (unaudited) | | | | | | | | (unaudited) | | | | | | | ||||||||||||||||||||||
Total revenue – GAAP | | | $ | 11,930,138 | | | | $ | 2,568,248 | | | | $ | 3,399,788 | | | | | $ | 11,413,881 | | | | $ | 3,020,384 | | | | $ | 3,399,788 | | | ||||||
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Net realized (gains) on investments | | | | (8,472,037) | | | | | — | | | | | — | | | ||||||||||||||||||||||
Net realized gains on investments | | | | (4,369,562) | | | | | — | | | | | — | | | ||||||||||||||||||||||
Deferred coinsurance ceding commission | | | | 3,908,889 | | | | | (1,838,878) | | | | | 3,678,196 | | | | | | 8,161,069 | | | | | 2,821,255 | | | | | 3,678,196 | | | ||||||
Adjusted revenue | | | $ | 7,366,990 | | | | $ | 729,370 | | | | $ | 7,077,984 | | | | | $ | 15,205,388 | | | | $ | 5,841,639 | | | | $ | 7,077,984 | | |
| | Six Months Ended June 30, | | | Year Ended December 31, 2019 | | | Nine Months Ended September 30, | | | Year Ended December 31, 2019 | | ||||||||||||||||||||||||||
| | 2020 | | 2019 | | | 2020 | | 2019 | | ||||||||||||||||||||||||||||
| | (unaudited) | | | | | | | | (unaudited) | | | | | | | ||||||||||||||||||||||
Net (loss) income attributable to Midwest Holding Inc. – GAAP | | | $ | 5,011,119 | | | | $ | (2,326,870) | | | | $ | (5,733,658) | | | ||||||||||||||||||||||
Net loss attributable to Midwest Holding Inc. – GAAP | | | $ | (526,123) | | | | $ | (3,989,684) | | | | $ | (5,733,658) | | | ||||||||||||||||||||||
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Net realized gains on investments | | | | (8,472,037) | | | | | — | | | | | — | | | | | | (4,369,562) | | | | | — | | | | | — | | | ||||||
Deferred coinsurance ceding commission | | | | 3,908,889 | | | | | (1,838,878) | | | | | 3,678,196 | | | | | | 8,161,069 | | | | | 2,821,255 | | | | | 3,678,196 | | | ||||||
Total adjustments | | | | (4,563,148) | | | | | (1,838,878) | | | | | 3,678,196 | | | | | | 3,791,507 | | | | | 2,821,255 | | | | | 3,678,196 | | | ||||||
Income tax (expense) benefit adjustment | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | ||||||
Adjusted net (loss) income | | | $ | 447,971 | | | | $ | (4,165,748) | | | | $ | (2,055,462) | | | ||||||||||||||||||||||
Adjusted net income (loss) | | | $ | 3,265,384 | | | | $ | (1,168,429) | | | | $ | (2,055,462) | | |
| | Year ended December 31, | | | Year ended December 31, | | ||||||||||||||||||||
| | 2019 | | 2018 | | | 2019 | | 2018 | | ||||||||||||||||
Premiums | | | $ | (152) | | | | $ | 135,387 | | | | | $ | (152) | | | | $ | 135,387 | | | ||||
Investment income, net of expenses | | | | 120,581 | | | | | 515,888 | | | | | | 120,581 | | | | | 515,888 | | | ||||
Net realized gains (losses) on investments | | | | 353,602 | | | | | 47,824 | | | |||||||||||||||
Net realized gains on investments | | | | 353,602 | | | | | 47,824 | | | |||||||||||||||
Amortization of deferred gain on reinsurance | | | | 2,643,801 | | | | | 117,871 | | | | | | 2,643,801 | | | | | 117,871 | | | ||||
Other revenue | | | | 281,956 | | | | | 58,842 | | | | | | 281,956 | | | | | 58,842 | | | ||||
| | | $ | 3,399,788 | | | | $ | 875,812 | | | | | $ | 3,399,788 | | | | $ | 875,812 | | |
| | | MYGA Premium(1) | | | FIA Premium(1)(2) | | ||||||
First quarter 2019 | | | | $ | 8,292,617 | | | | | $ | — | | |
Second quarter 2019 | | | | | 29,946,263 | | | | | | — | | |
Third quarter 2019 | | | | | 41,261,292 | | | | | | — | | |
Fourth quarter 2019 | | | | | 66,247,565 | | | | | | 15,616,831 | | |
Total issued for 2019 | | | | $ | 145,747,737 | | | | | $ | 15,616,831 | | |
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Fixed maturities | | | | $ | 292,453 | | | | | $ | 789,949 | | |
Other | | | | | 38,397 | | | | | | 44,614 | | |
Gross investment income | | | | | 330,850 | | | | | | 834,563 | | |
Less investment expenses | | | | | (210,269) | | | | | | (318,675) | | |
Investment income, net of expenses | | | | $ | 120,581 | | | | | $ | 515,888 | | |
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Interest credited | | | | $ | 6,584 | | | | | $ | 47,936 | | |
Death and other benefits | | | | | 34,436 | | | | | | 93,646 | | |
Increase (decrease) in benefit reserves | | | | | 34,500 | | | | | | (27,121) | | |
Salaries and benefits | | | | | 2,701,314 | | | | | | 2,160,853 | | |
Other operating expenses | | | | | 5,997,955 | | | | | | 3,637,748 | | |
| | | | $ | 8,774,789 | | | | | $ | 5,913,062 | | |
|
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Interest credited | | | | $ | 6,584 | | | | | $ | 47,936 | | |
Death and other benefits | | | | | 34,436 | | | | | | 93,646 | | |
Increase (decrease) in benefit reserves | | | | | 34,500 | | | | | | (27,121) | | |
Salaries and benefits | | | | | 2,701,314 | | | | | | 2,160,853 | | |
Other operating expenses | | | | | 5,997,955 | | | | | | 3,637,748 | | |
| | | | $ | 8,774,789 | | | | | $ | 5,913,062 | | |
| | | December 31, 2019 | | | December 31, 2018 | | ||||||||||||||||||
| | | Carrying Value | | | Percent of Total | | | Carrying Value | | | Percent of Total | | ||||||||||||
Fixed maturity securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | | | $ | 2,081,224 | | | | | | 1.1% | | | | | $ | 1,995,951 | | | | | | 9.9% | | |
Mortgage-backed securities | | | | | 798,608 | | | | | | 0.4 | | | | | | 1,004,051 | | | | | | 5.0 | | |
Asset-backed securities | | | | | 95,247,824 | | | | | | 52.2 | | | | | | — | | | | | | — | | |
States and political subdivisions – general obligation | | | | | 249,282 | | | | | | 0.1 | | | | | | 263,184 | | | | | | 1.3 | | |
States and political subdivisions – special revenue | | | | | 25,291 | | | | | | — | | | | | | 25,173 | | | | | | 0.1 | | |
Corporate | | | | | 18,839,632 | | | | | | 10.4 | | | | | | 14,095,824 | | | | | | 69.5 | | |
Total fixed maturity securities | | | | | 117,241,861 | | | | | | 64.2 | | | | | | 17,384,183 | | | | | | 85.8 | | |
Mortgage loans on real estate, held for investment | | | | | 13,810,041 | | | | | | 7.6 | | | | | | — | | | | | | — | | |
Derivatives | | | | | 575,294 | | | | | | 0.3 | | | | | | — | | | | | | — | | |
Investment escrow | | | | | 3,899,986 | | | | | | 2.1 | | | | | | — | | | | | | — | | |
Other invested assets | | | | | 2,468,947 | | | | | | 1.4 | | | | | | — | | | | | | — | | |
Preferred stock | | | | | 500,000 | | | | | | 0.3 | | | | | | — | | | | | | — | | |
Cash and cash equivalents | | | | | 43,716,205 | | | | | | 24.0 | | | | | | 2,832,567 | | | | | | 14.0 | | |
Policy loans | | | | | 106,014 | | | | | | 0.1 | | | | | | 43,843 | | | | | | 0.2 | | |
| | | | $ | 182,318,348 | | | | | | 100.0% | | | | | $ | 20,260,593 | | | | | | 100.0% | | |
| | December 31, 2019 | | December 31, 2018 | | | December 31, 2019 | | December 31, 2018 | | ||||||||||||||||||||||||||||||||||||||||
| | Carrying Value | | Percent | | Carrying Value | | Percent | | | Carrying Value | | Percent | | Carrying Value | | Percent | | ||||||||||||||||||||||||||||||||
AAA and U.S. Government | | | $ | 2,885,004 | | | | | 2.5% | | | | $ | 3,045,768 | | | | | 17.5% | | | | | $ | 2,885,004 | | | | | 2.5% | | | | $ | 3,045,768 | | | | | 17.5% | | | ||||||||
AA | | | | 6,658,274 | | | | | 5.7 | | | | | 1,721,450 | | | | | 9.9 | | | | | | 6,658,274 | | | | | 5.7 | | | | | 1,721,450 | | | | | 9.9 | | | ||||||||
A | | | | 23,812,502 | | | | | 20.3 | | | | | 4,221,297 | | | | | 24.3 | | | | | | 23,812,502 | | | | | 20.3 | | | | | 4,221,297 | | | | | 24.3 | | | ||||||||
BBB | | | | 79,996,081 | | | | | 68.2 | | | | | 8,261,450 | | | | | 47.5 | | | | | | 79,996,081 | | | | | 68.2 | | | | | 8,261,450 | | | | | 47.5 | | | ||||||||
Total investment grade | | | | 113,351,861 | | | | | 96.7 | | | | | 17,249,965 | | | | | 99.2 | | | | | | 113,351,861 | | | | | 96.7 | | | | | 17,249,965 | | | | | 99.2 | | | ||||||||
BB and other | | | | 3,890,000 | | | | | 3.3 | | | | | 134,218 | | | | | 0.8 | | | | | | 3,890,000 | | | | | 3.3 | | | | | 134,218 | | | | | 0.8 | | | ||||||||
Total | | | $ | 117,241,861 | | | | | 100.0% | | | | $ | 17,384,183 | | | | | 100.0% | | | | | $ | 117,241,861 | | | | | 100.0% | | | | $ | 17,384,183 | | | | | 100.0% | | | ||||||||
| |
| | | Nine months ended September 30, | | | |||||||||||
| | | 2020 | | | 2019 | | | ||||||||
| | | (unaudited) | | ||||||||||||
Insurance premiums | | | | $ | 24 | | | | | $ | (152) | | | | ||
Investment income, net of expenses | | | | | 1,277,337 | | | | | | 330,910 | | | | ||
Net realized gains on investments(1) | | | | | 7,829,105 | | | | | | 9,315 | | | | ||
Amortization of deferred gain on reinsurance | | | | | 814,163 | | | | | | 2,465,678 | | | | ||
Other revenue | | | | | 1,493,252 | | | | | | 214,633 | | | | ||
| | | | $ | 11,413,881 | | | | | $ | 3,020,384 | | | |
| | | Nine months ended September 30, | | |||||||||||||||
| | | 2020 | | | 2019 | | ||||||||||||
| | | MYGA Premium(1) | | | FIA Premium(1)(2) | | | MYGA Premium(1) | | |||||||||
First quarter | | | | $ | 31,565,506 | | | | | $ | 16,249,504 | | | | | $ | 8,292,617 | | |
Second quarter | | | | | 27,400,367 | | | | | | 72,270,636 | | | | | | 29,946,263 | | |
Third quarter | | | | | 27,537,077 | | | | | | 104,514,068 | | | | | | 41,261,292 | | |
Total issued as of September 30, 2020 and 2019 | | | | $ | 86,502,950 | | | | | $ | 193,034,208 | | | | | $ | 79,500,172 | | |
| | | Nine months ended September 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
| | | (unaudited) | | |||||||||
Fixed maturities | | | | $ | 1,364,414 | | | | | $ | 342,104 | | |
Mortgage loans | | | | | 80,749 | | | | | | 78,466 | | |
Other | | | | | 62,942 | | | | | | 6,973 | | |
Gross investment income | | | | | 1,508,105 | | | | | | 427,543 | | |
Less: investment expense | | | | | (230,768) | | | | | | (96,633) | | |
Investment income, net of expenses | | | | $ | 1,277,337 | | | | | $ | 330,910 | | |
| | | Nine months ended September 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
| | | (unaudited) | | |||||||||
Interest credited | | | | $ | 463,826 | | | | | $ | 42,895 | | |
Benefits | | | | | (5,904) | | | | | | 1,872 | | |
Increase in benefit reserves | | | | | — | | | | | | 34,500 | | |
Amortization of deferred acquisition costs | | | | | 376,179 | | | | | | 88,503 | | |
Salaries and benefits | | | | | 3,623,605 | | | | | | 1,782,708 | | |
Other operating expenses | | | | | 5,337,188 | | | | | | 4,898,134 | | |
| | | | $ | 9,794,894 | | | | | $ | 6,848,612 | | |
|
| | | September 30, 2020 | | | December 31, 2019 | | ||||||||||||||||||
| | | Carrying Value | | | Percent of Total | | | Carrying Value | | | Percent of Total | | ||||||||||||
| | | (unaudited) | | | | | ||||||||||||||||||
Fixed maturity securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | | | $ | 2,105,022 | | | | | | 0.4% | | | | | $ | 2,081,224 | | | | | | 1.1% | | |
Mortgage-backed securities | | | | | 378,136 | | | | | | 0.1 | | | | | | 798,608 | | | | | | 0.4 | | |
Asset-backed securities | | | | | 202,442,051 | | | | | | 42.4 | | | | | | 95,247,824 | | | | | | 52.2 | | |
States and political subdivisions – general obligation | | | | | 248,748 | | | | | | 0.1 | | | | | | 249,282 | | | | | | 0.1 | | |
States and political subdivisions – special revenue | | | | | 6,190,179 | | | | | | 1.3 | | | | | | 25,291 | | | | | | — | | |
Trust preferred | | | | | 2,162,959 | | | | | | 0.5 | | | | | | — | | | | | | — | | |
Corporate | | | | | 37,015,855 | | | | | | 7.8 | | | | | | 18,839,632 | | | | | | 10.4 | | |
|
| | | September 30, 2020 | | | December 31, 2019 | | ||||||||||||||||||
| | | Carrying Value | | | Percent of Total | | | Carrying Value | | | Percent of Total | | ||||||||||||
| | | (unaudited) | | | | | ||||||||||||||||||
Total fixed maturity securities | | | | | 250,542,950 | | | | | | 52.6 | | | | | | 117,241,861 | | | | | | 64.2 | | |
Mortgage loans on real estate, held for investment | | | | | 61,464,515 | | | | | | 12.9 | | | | | | 13,810,041 | | | | | | 7.6 | | |
Derivatives | | | | | 7,664,006 | | | | | | 1.6 | | | | | | 575,294 | | | | | | 0.3 | | |
Other invested assets | | | | | 14,808,870 | | | | | | 3.1 | | | | | | 2,468,947 | | | | | | 1.4 | | |
Preferred stock | | | | | — | | | | | | — | | | | | | 500,000 | | | | | | 0.3 | | |
Investment escrow | | | | | — | | | | | | — | | | | | | 3,899,986 | | | | | | 2.1 | | |
Notes receivable | | | | | 5,516,302 | | | | | | 1.2 | | | | | | — | | | | | | — | | |
Cash and cash equivalents | | | | | 136,431,785 | | | | | | 28.6 | | | | | | 43,716,205 | | | | | | 24.0 | | |
Policy Loans | | | | | 147,309 | | | | | | — | | | | | | 106,014 | | | | | | 0.1 | | |
| | | | $ | 476,575,737 | | | | | | 100.0% | | | | | $ | 182,318,348 | | | | | | 100.0% | | |
|
| | | September 30, 2020 | | | December 31, 2019 | | ||||||||||||||||||
| | | Carrying Value | | | Percent | | | Carrying Value | | | Percent | | ||||||||||||
| | | (unaudited) | | | | | ||||||||||||||||||
AAA and U.S. Government | | | | $ | 2,706,938 | | | | | | 1.1% | | | | | $ | 2,885,004 | | | | | | 2.5% | | |
AA | | | | | 4,450,424 | | | | | | 1.8 | | | | | | 6,658,274 | | | | | | 5.7 | | |
A | | | | | 38,166,630 | | | | | | 15.2 | | | | | | 23,812,502 | | | | | | 20.3 | | |
BBB | | | | | 165,823,031 | | | | | | 66.2 | | | | | | 79,996,081 | | | | | | 68.2 | | |
Total investment grade | | | | | 211,147,023 | | | | | | 84.3 | | | | | | 113,351,861 | | | | | | 96.7 | | |
BB and other | | | | | 39,395,927 | | | | | | 15.7 | | | | | | 3,890,000 | | | | | | 3.3 | | |
Total | | | | $ | 250,542,950 | | | | | | 100.0% | | | | | $ | 117,241,861 | | | | | | 100.0% | | |
| | | Six months ended June 30, | | | |||||||||||
| | | 2020 | | | 2019 | | | ||||||||
| | | (unaudited) | | ||||||||||||
Insurance premiums | | | | $ | 51 | | | | | $ | (2,479) | | | | ||
Investment income, net of expenses | | | | | 843,136 | | | | | | 639,010 | | | | ||
Net realized gains (losses) on investments(1) | | | | | 9,780,139 | | | | | | (3,217) | | | | ||
Amortization of deferred gain on reinsurance | | | | | 520,707 | | | | | | 1,852,599 | | | | ||
Other revenue | | | | | 786,105 | | | | | | 82,335 | | | | ||
| | | | $ | 11,930,138 | | | | | $ | 2,568,248 | | | |
| | | Six months ended June 30, | | |||||||||||||||
| | | 2020 | | | 2019 | | ||||||||||||
| | | MYGA Premium(1) | | | FIA Premium(1)(2) | | | MYGA Premium(1) | | |||||||||
| | | (unaudited) | | | (unaudited) | | ||||||||||||
First quarter | | | | $ | 31,565,506 | | | | | $ | 16,249,504 | | | | | $ | 8,292,617 | | |
Second quarter | | | | | 27,400,367 | | | | | | 72,270,636 | | | | | | 29,946,263 | | |
Total issued as of June 30, 2020 and 2019 | | | | $ | 58,965,873 | | | | | $ | 88,520,140 | | | | | $ | 38,238,880 | | |
|
| | | Six months ended June 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
| | | (unaudited) | | |||||||||
Fixed maturities | | | | $ | 1,041,929 | | | | | $ | 631,118 | | |
Mortgage loans | | | | | — | | | | | | 9,656 | | |
Other | | | | | — | | | | | | 8,076 | | |
Gross investment income | | | | | 1,041,929 | | | | | | 648,850 | | |
Less: refund received on investment expenses | | | | | (198,793) | | | | | | (9,840) | | |
Investment income, net of expenses | | | | $ | 843,136 | | | | | $ | 639,010 | | |
| | | Six months ended June 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
| | | (unaudited) | | |||||||||
Interest credited | | | | $ | 83,150 | | | | | $ | 251,187 | | |
Death and other benefits | | | | | (3,087) | | | | | | 1,872 | | |
Amortization of deferred acquisition costs | | | | | 140,897 | | | | | | 21,865 | | |
Salaries and benefits | | | | | 2,179,830 | | | | | | 1,115,074 | | |
Other operating expenses | | | | | 3,630,800 | | | | | | 3,505,120 | | |
| | | | $ | 6,031,590 | | | | | $ | 4,895,118 | | |
| | | June 30, 2020 | | | December 31, 2019 | | ||||||||||||||||||
| | | Carrying Value | | | Percent of Total | | | Carrying Value | | | Percent of Total | | ||||||||||||
| | | (unaudited) | | | | | ||||||||||||||||||
Fixed maturity securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | | | $ | 1,836,729 | | | | | | 0.5% | | | | | $ | 2,081,224 | | | | | | 1.1% | | |
Mortgage-backed securities | | | | | 721,769 | | | | | | 0.2 | | | | | | 798,608 | | | | | | 0.4 | | |
Asset-backed securities | | | | | 167,908,244 | | | | | | 49.8 | | | | | | 95,247,824 | | | | | | 52.2 | | |
| | | June 30, 2020 | | | December 31, 2019 | | ||||||||||||||||||
| | | Carrying Value | | | Percent of Total | | | Carrying Value | | | Percent of Total | | ||||||||||||
| | | (unaudited) | | | | | ||||||||||||||||||
States and political subdivisions – general obligation | | | | | 250,079 | | | | | | 0.1 | | | | | | 249,282 | | | | | | 0.1 | | |
States and political subdivisions – special revenue | | | | | 3,465,356 | | | | | | 1.0 | | | | | | 25,291 | | | | | | — | | |
Trust preferred | | | | | 2,124,478 | | | | | | 0.6 | | | | | | — | | | | | | — | | |
Corporate | | | | | 23,803,632 | | | | | | 7.0 | | | | | | 18,839,632 | | | | | | 10.4 | | |
Total fixed maturity securities | | | | | 200,110,287 | | | | | | 59.2 | | | | | | 117,241,861 | | | | | | 64.2 | | |
Mortgage loans on real estate, held for investment | | | | | 51,171,943 | | | | | | 15.1 | | | | | | 13,810,041 | | | | | | 7.6 | | |
Derivatives | | | | | 3,228,102 | | | | | | 1.0 | | | | | | 575,294 | | | | | | 0.3 | | |
Other invested assets | | | | | 3,090,964 | | | | | | 0.9 | | | | | | 2,468,947 | | | | | | 1.4 | | |
Preferred stock | | | | | — | | | | | | — | | | | | | 500,000 | | | | | | 0.3 | | |
Investment escrow | | | | | — | | | | | | — | | | | | | 3,899,986 | | | | | | 2.1 | | |
Notes receivable | | | | | 5,488,101 | | | | | | 1.6 | | | | | | — | | | | | | — | | |
Cash and cash equivalents | | | | | 75,041,902 | | | | | | 22.2 | | | | | | 43,716,205 | | | | | | 24.0 | | |
Policy Loans | | | | | 141,172 | | | | | | — | | | | | | 106,014 | | | | | | 0.1 | | |
| | | | $ | 338,272,471 | | | | | | 100.0% | | | | | $ | 182,318,348 | | | | | | 100.0% | | |
|
| | | June 30, 2020 | | | December 31, 2019 | | ||||||||||||||||||
| | | Carrying Value | | | Percent | | | Carrying Value | | | Percent | | ||||||||||||
| | | (unaudited) | | | | | ||||||||||||||||||
AAA and U.S. Government | | | | $ | 2,335,428 | | | | | | 1.2% | | | | | $ | 2,885,004 | | | | | | 2.5% | | |
AA | | | | | 5,608,888 | | | | | | 2.8 | | | | | | 6,658,274 | | | | | | 5.7 | | |
A | | | | | 40,244,011 | | | | | | 20.1 | | | | | | 23,812,502 | | | | | | 20.3 | | |
BBB | | | | | 138,568,407 | | | | | | 69.2 | | | | | | 79,996,081 | | | | | | 68.2 | | |
Total investment grade | | | | | 186,756,734 | | | | | | 93.3 | | | | | | 113,351,861 | | | | | | 96.7 | | |
BB and other | | | | | 13,353,553 | | | | | | 6.7 | | | | | | 3,890,000 | | | | | | 3.3 | | |
Total | | | | $ | 200,110,287 | | | | | | 100.0% | | | | | $ | 117,241,861 | | | | | | 100.0% | | |
| | For the six months ended, June 30, | | For the year ended, December 31, | | | For the nine months ended, September 30, | | For the year ended, December 31, | | ||||||||||||||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | 2018 | | | 2020 | | 2019 | | 2019 | | 2018 | | ||||||||||||||||||||||||||||||||
| | (unaudited) | | | | (unaudited) | | | ||||||||||||||||||||||||||||||||||||||||||
Consolidated GAAP net income (loss) | | | $ | 5,011,118 | | | | | (2,326,870) | | | | | (5,733,658) | | | | | (5,065,534) | | | | | $ | (526,123) | | | | | (3,989,684) | | | | | (5,733,658) | | | | | (5,065,534) | | | ||||||||
Exclude: Midwest non insurance transactional entities | | | | 827,860 | | | | | (1,014,833) | | | | | (1,209,873) | | | | | 129,408 | | | | | | (479,759) | | | | | (1,063,129) | | | | | (1,209,873) | | | | | 129,408 | | | ||||||||
GAAP net income (loss) of statutory insurance entities | | | $ | 4,183,258 | | | | | (1,312,037) | | | | | (4,523,785) | | | | | (5,194,942) | | | | | $ | (46,364) | | | | | (2,926,555) | | | | | (4,523,785) | | | | | (5,194,942) | | | ||||||||
GAAP net income (loss) by statutory insurance entity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
American Life | | | $ | 3,569,924 | | | | | (1,312,037) | | | | | (4,523,785) | | | | | (5,194,942) | | | | | $ | (935,091) | | | | | (2,926,555) | | | | | (4,523,785) | | | | | (5,194,942) | | | ||||||||
Seneca Re Protected Cell | | | | 613,334 | | | | | — | | | | | — | | | | | — | | | | | | 888,727 | | | | | — | | | | | — | | | | | — | | | ||||||||
| | | $ | 4,183,258 | | | | | (1,312,037) | | | | | (4,523,785) | | | | | (5,194,942) | | | | | $ | (46,364) | | | | | (2,926,555) | | | | | (4,523,785) | | | | | (5,194,942) | | | ||||||||
GAAP net income (loss) of American Life | | | $ | 3,569,924 | | | | | (1,312,037) | | | | | (4,523,785) | | | | | (5,194,942) | | | | | $ | (935,091) | | | | | (2,926,555) | | | | | (4,523,785) | | | | | (5,194,942) | | | ||||||||
Increase (decrease) due to: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Deferred acquisition costs | | | | (9,697,787) | | | | | (1,135,208) | | | | | (6,000,656) | | | | | 143,142 | | | | | | (20,187,682) | | | | | (2,281,883) | | | | | (6,000,656) | | | | | 143,142 | | | ||||||||
Coinsurance transactions | | | | 21,775,316 | | | | | (173,785) | | | | | 13,862,116 | | | | | 2,507,039 | | | | | | 85,552,904 | | | | | 9,301,720 | | | | | 13,862,116 | | | | | 2,507,039 | | | ||||||||
Carrying value of reserves | | | | (4,650,078) | | | | | (326,808) | | | | | (1,798,627) | | | | | (1,704,191) | | | | | | (54,575,870) | | | | | (4,443,188) | | | | | (1,798,627) | | | | | (1,704,191) | | | ||||||||
Gain on sale of investments, net of asset valuation reserve | | | | (8,376,919) | | | | | (16,267) | | | | | (133,633) | | | | | 164,276 | | | | | | (5,134,782) | | | | | (19,297) | | | | | (133,633) | | | | | 164,276 | | | ||||||||
Other | | | | 104,257 | | | | | (13,899) | | | | | (87,530) | | | | | (198,675) | | | | | | (178,130) | | | | | 219,956 | | | | | (87,530) | | | | | (198,675) | | | ||||||||
SAP net income (loss) of American Life | | | $ | 2,724,713 | | | | | (2,978,004) | | | | | 1,317,885 | | | | | (4,283,351) | | | | | $ | 4,541,349 | | | | | (149,247) | | | | | 1,317,885 | | | | | (4,283,351) | | | ||||||||
GAAP net income (loss) of Seneca Re Protected Cell | | | $ | 613,334 | | | | | — | | | | | — | | | | | — | | | | | $ | 888,727 | | | | | — | | | | | — | | | | | — | | | ||||||||
Increase (decrease) due to: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Deferred acquisitions costs | | | $ | (2,586,037) | | | | | — | | | | | — | | | | | — | | | | | $ | (8,281,149) | | | | | — | | | | | — | | | | | — | | | ||||||||
Coinsurance transactions | | | | 26,977,374 | | | | | — | | | | | — | | | | | — | | | | | | 71,629,646 | | | | | — | | | | | — | | | | | — | | | ||||||||
Carrying value of reserves | | | | (26,317,717) | | | | | — | | | | | — | | | | | — | | | | | | (68,216,309) | | | | | — | | | | | — | | | | | — | | | ||||||||
Other | | | | 129,814 | | | | | — | | | | | | | | | | | | | |||||||||||||||||||||||||||||
SAP net loss of Seneca Re Protected Cell | | | | (1,313,046) | | | | | — | | | | | — | | | | | — | | | | | | (3,849,271) | | | | | — | | | | | — | | | | | — | | | ||||||||
SAP net income (loss) of statutory insurance entities | | | $ | 1,411,667 | | | | | (2,978,004) | | | | | 1,317,885 | | | | | (4,283,351) | | | | | $ | 692,078 | | | | | (149,247) | | | | | 1,317,885 | | | | | (4,283,351) | | |
| | Six months ended June 30, | | Year ended December 31, | | | Nine months ended September 30, | | Year ended December 31, | | ||||||||||||||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | 2018 | | | 2020 | | 2019 | | 2019 | | 2018 | | ||||||||||||||||||||||||||||||||
| | (unaudited) | | | | | | | | | | | | | (unaudited) | | | | | | | | | | | | ||||||||||||||||||||||||
Net cash (used in) or provided by for operating activities | | | $ | 2,480,934 | | | | $ | (4,911,603) | | | | $ | (2,457,176) | | | | $ | (20,369,748) | | | |||||||||||||||||||||||||||||
Net cash provided (used in) by investing activities | | | | (132,423,736) | | | | | (25,904,372) | | | | | (117,890,852) | | | | | 1,862,609 | | | |||||||||||||||||||||||||||||
Net cash provided by or (used in) for operating activities | | | $ | 2,857,266 | | | | $ | 78,883,528 | | | | $ | (2,457,176) | | | | $ | (20,369,748) | | | |||||||||||||||||||||||||||||
Net cash (used in) or provided by investing activities | | | | (202,251,666) | | | | | (61,356,602) | | | | | (117,890,852) | | | | | 1,862,609 | | | |||||||||||||||||||||||||||||
Net cash provided by financing activities | | | | 161,268,499 | | | | | 38,257,632 | | | | | 161,231,666 | | | | | 20,388,179 | | | | | | 292,109,980 | | | | | 4,010,116 | | | | | 161,231,666 | | | | | 20,388,179 | | | ||||||||
Net increase in cash and cash equivalents | | | | 31,325,697 | | | | | 7,441,657 | | | | | 40,883,638 | | | | | 1,881,040 | | | | | | 92,715,580 | | | | | 21,537,042 | | | | | 40,883,638 | | | | | 1,881,040 | | | ||||||||
Cash and cash equivalents: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Beginning of period | | | | 43,716,205 | | | | | 2,832,567 | | | | | 2,832,567 | | | | | 951,527 | | | | | | 43,716,205 | | | | | 2,832,567 | | | | | 2,832,567 | | | | | 951,527 | | | ||||||||
End of period | | | $ | 75,041,902 | | | | $ | 10,274,224 | | | | $ | 43,716,205 | | | | $ | 2,832,567 | | | | | $ | 136,431,785 | | | | $ | 24,369,609 | | | | $ | 43,716,205 | | | | $ | 2,832,567 | | |
Name | | Age | | Position | | Director/Officer Since | | | Age | | Position | | Director/Officer Since | | ||||||
Mike Minnich | | 48 | | Executive Chairman, Director | | 2019 | | | 49 | | Co-Chief Executive Officer, Director | | 2019 | | ||||||
A. Michael Salem | | 39 | | Chief Executive Officer, Director | | 2019 | | | 39 | | Co-Chief Executive Officer, Director | | 2019 | | ||||||
Mark A. Oliver | | 62 | | President | | 2010 | | | 62 | | President | | 2010 | | ||||||
Shyamal Somaroo | | 50 | | Chief Technology Officer | | 2020 | | | 50 | | Chief Technology Officer | | 2020 | | ||||||
Debra K. Havranek | | 64 | | Principal Financial Officer and Treasurer | | 2015 | | | 64 | | Principal Financial Officer and Treasurer | | 2015 | | ||||||
Eric J. Del Monaco | | 43 | | Chief Risk Officer | | 2020 | | |||||||||||||
John T. Hompe | | 59 | | Director | | 2015 | | | 59 | | Director | | 2015 | | ||||||
Firman Leung | | 62 | | Director | | 2016 | | | 63 | | Director | | 2016 | | ||||||
Jack Theeler | | 74 | | Director | | 2012 | | | 74 | | Director | | 2012 | | ||||||
Sachin Goel | | 39 | | Director | | 2019 | | | 39 | | Director | | 2019 | | ||||||
Douglas K. Bratton | | 61 | | Director | | 2020 | | | 61 | | Director | | 2020 | |
Name and Principal Position | | Year | | Salary | | Bonus | | Option Awards | | All Other Compensation(2) | | Total | | | Year | | Salary | | Bonus | | Option Awards | | All Other Compensation(2) | | Total | | ||||||||||||||||||||||||||||||||||||||||||||||||
Mike Minnich, Executive Chairman, Director (1) | | | | | 2019 | | | | $ | 250,000 | | | | $ | — | | | | $ | — | | | | $ | 3,074(3) | | | | $ | 253,074 | | | ||||||||||||||||||||||||||||||||||||||||||
| | | 2018 | | | | | 125,000 | | | | | — | | | | | — | | | | | — | | | | | 125,000 | | | ||||||||||||||||||||||||||||||||||||||||||||
A. Michael Salem, CEO, Director (1) | | | | | 2019 | | | | $ | 250,000 | | | | $ | — | | | | $ | — | | | | $ | — | | | | $ | 250,000 | | | ||||||||||||||||||||||||||||||||||||||||||
| | | 2018 | | | | | 125,000 | | | | | — | | | | | — | | | | | — | | | | | 125,000 | | | ||||||||||||||||||||||||||||||||||||||||||||
Mike Minnich, Co-Chief Executive Officer, Director (1) | | | | | 2019 | | | | $ | 250,000 | | | | $ | — | | | | $ | — | | | | $ | 3,074(3) | | | | $ | 253,074 | | | ||||||||||||||||||||||||||||||||||||||||||
| | | 2018 | | | | | 125,000 | | | | | — | | | | | — | | | | | — | | | | | 125,000 | | | ||||||||||||||||||||||||||||||||||||||||||||
A. Michael Salem, Co-Chief Executive Officer, Director (1) | | | | | 2019 | | | | $ | 250,000 | | | | $ | — | | | | $ | — | | | | $ | — | | | | $ | 250,000 | | | ||||||||||||||||||||||||||||||||||||||||||
| | | 2018 | | | | | 125,000 | | | | | — | | | | | — | | | | | — | | | | | 125,000 | | | ||||||||||||||||||||||||||||||||||||||||||||
Mark A. Oliver, President (4) | | | | | 2019 | | | | $ | 250,000 | | | | $ | 50,000 | | | | $ | 7,300(5) | | | | $ | 25,400(6) | | | | $ | 332,700 | | | | | | | 2019 | | | | $ | 250,000 | | | | $ | 50,000 | | | | $ | 7,300(5) | | | | $ | 25,400(6) | | | | $ | 332,700 | | | ||||||||||
| | | 2018 | | | | | 305,729 | | | | | 25,000 | | | | | — | | | | | 25,250(6) | | | | | 355,979 | | | | | | 2018 | | | | | 305,729 | | | | | 25,000 | | | | | — | | | | | 25,250(6) | | | | | 355,979 | | |
| | Option Awards | | | Option Awards | | ||||||||||||||||||||||||||||||||||||||||||||
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options(1) | | Option Exercise Price ($)(2) | | Option Expiration Date | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options(1) | | Option Exercise Price ($) | | Option Expiration Date | | ||||||||||||||||||||||||||||||||
Mark A. Oliver | | | | — | | | | | 6,000 | | | | $ | 25.00 | | | | | 07/17/2029 | | | | | | — | | | | | 6,000 | | | | $ | 25.00 | | | | | 07/17/2029 | | |
Name | | | Year | | | Fees Earned or Paid in Cash | | | Stock Option Awards(1) | | |||||||||
Jack Theeler | | | | | 2019 | | | | | $ | 9,250 | | | | | $ | 91 | | |
Dana Stapleton(2) | | | | | 2019 | | | | | | 6,350 | | | | | $ | 91 | | |
John Hompe | | | | | 2019 | | | | | | 9,250 | | | | | $ | 91 | | |
Scott Morrison(2) | | | | | 2019 | | | | | | 9,250 | | | | | $ | 91 | | |
Sachin Goel(3) | | | | | 2019 | | | | | | 1,350 | | | | | $ | 91 | | |
Firman Leung | | | | | 2019 | | | | | | 7,350 | | | | | $ | 91 | | |
| | Voting Common Stock | | | Voting Common Stock | | ||||||||||||||||||||||||||||||||
Name | | Number of Shares Beneficially Owned Prior to Offering | | | Percentage of Shares Beneficially Owned | | | Number of Shares Beneficially Owned Prior to Offering | | | Percentage of Shares Beneficially Owned | | ||||||||||||||||||||||||||
| Before Offering | | After Offering | | | Before Offering | | After Offering | | |||||||||||||||||||||||||||||
Named Executive Officers and Directors: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Michael Minnich | | | | 760,129 | | | | | 30.0% | | | | | % | | | | | | 413,176 | | | | | 15.2% | | | | | % | | | ||||||
A. Michael Salem | | | | 600,077 | | | | | 22.1% | | | | | % | | | | | | 203,298 | | | | | 7.5% | | | | | % | | | ||||||
Mark A. Oliver | | | | 501 | | | | | * | | | | | * | | | | | | 501 | | | | | * | | | | | * | | | ||||||
John T. Hompe | | | | — | | | | | * | | | | | * | | | | | | — | | | | | * | | | | | * | | | ||||||
Firman Leung | | | | — | | | | | * | | | | | * | | | | | | — | | | | | * | | | | | * | | | ||||||
Jack Theeler | | | | 108 | | | | | * | | | | | * | | | | | | 108 | | | | | * | | | | | * | | | ||||||
Sachin Goel | | | | 4,444 | | | | | * | | | | | * | | | | | | 4,444 | | | | | * | | | | | * | | | ||||||
Douglas K. Bratton | | | | 444,444 | | | | | 16.3% | | | | | % | | | | | | 444,444 | | | | | 16.3% | | | | | % | | | ||||||
Named Executive Officers and Directors as a Group (8 persons): | | | | 1,209,626 | | | | | 44.5% | | | | | % | | | | | | 1,065,971 | | | | | 39.2% | | | | | % | | | ||||||
Beneficial Owners of More than Five Percent: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Vespoint, LLC(3) | | | | 600,076 | | | | | 22.1% | | | | | % | | | ||||||||||||||||||||||
Crestline Assurance Holdings LLC(5) | | | | 444,444 | | | | | 16.3% | | | | | % | | | ||||||||||||||||||||||
Crestline Assurance Holdings LLC(4) | | | | 444,444 | | | | | 16.3% | | | | | % | | |
Underwriter | | | Number of Shares | |
Piper Sandler & Co. | | | | |
| | | | | | Total | | |||
| | | Per Share | | | Without Option | | | With Option | |
Public offering price | | | | | | | | | | |
Underwriting discounts and commissions | | | | | | | | | | |
Proceeds, before expenses, to us | | | | | | | | | | |
| | | | | F-2 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-9 | | |
| | | June 30, 2020 | | | December 31, 2019 | | | December 31, 2018 | | |||||||||
| | | (Unaudited) | | | | | | | | | | | | | | |||
Assets | | | | | | | | | | | | | | | | | | | |
Investments, available for sale, at fair value fixed maturities (amortized cost: $206,950,851, $116,676,312 and $19,226,841, respectively) (See Note 6) | | | | $ | 200,110,287 | | | | | $ | 117,241,861 | | | | | $ | 17,384,183 | | |
Mortgage loans on real estate, held for investment | | | | | 51,171,943 | | | | | | 13,810,041 | | | | | | — | | |
Derivatives instruments (See Note 7) | | | | | 3,228,102 | | | | | | 575,294 | | | | | | — | | |
Other invested assets | | | | | 3,090,964 | | | | | | 2,468,947 | | | | | | — | | |
Preferred stock | | | | | — | | | | | | 500,000 | | | | | | — | | |
Investment escrow | | | | | — | | | | | | 3,899,986 | | | | | | — | | |
Notes receivable | | | | | 5,488,101 | | | | | | — | | | | | | — | | |
Policy loans | | | | | 141,172 | | | | | | 106,014 | | | | | | 43,843 | | |
Total investments | | | | | 263,230,569 | | | | | | 138,602,143 | | | | | | 17,428,026 | | |
Cash and cash equivalents | | | | | 75,041,902 | | | | | | 43,716,205 | | | | | | 2,832,567 | | |
Deferred acquisition costs, net | | | | | 3,968,748 | | | | | | — | | | | | | — | | |
Premiums receivable | | | | | 349,649 | | | | | | 355,959 | | | | | | 346,870 | | |
Accrued investment income | | | | | 3,471,429 | | | | | | 1,511,200 | | | | | | 200,708 | | |
Reinsurance recoverables (See Note 10) | | | | | 43,355,941 | | | | | | 30,579,524 | | | | | | 23,100,644 | | |
Intangible assets | | | | | 700,000 | | | | | | 700,000 | | | | | | 700,000 | | |
Property and equipment, net | | | | | 105,685 | | | | | | 85,395 | | | | | | 91,414 | | |
Operating lease right of use assets | | | | | 409,165 | | | | | | 470,132 | | | | | | 592,065 | | |
Other assets | | | | | 3,933,728 | | | | | | 241,580 | | | | | | 261,884 | | |
Assets associated with business held for sale (See Note 4) | | | | | 1,142,379 | | | | | | 3,653,748 | | | | | | 20,937,071 | | |
Total assets | | | | $ | 395,709,195 | | | | | $ | 219,915,886 | | | | | $ | 66,491,249 | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
Benefit reserves | | | | $ | 16,434,819 | | | | | $ | 16,319,912 | | | | | $ | 16,012,655 | | |
Policy claims | | | | | 232,923 | | | | | | 225,228 | | | | | | 270,785 | | |
Deposit-type contracts (See Note 13) | | | | | 321,830,976 | | | | | | 171,168,785 | | | | | | 7,234,927 | | |
Advance premiums | | | | | 646 | | | | | | 261 | | | | | | 490 | | |
Long-term debt | | | | | | | | | | | | | | | | | 18,938,705 | | |
Deferred gain on coinsurance transactions | | | | | 11,487,084 | | | | | | 7,578,195 | | | | | | 3,899,999 | | |
Lease liabilities (See Note 15): | | | | | | | | | | | | | | | | | | | |
Finance lease | | | | | — | | | | | | 1,860 | | | | | | 9,299 | | |
Operating lease | | | | | 460,791 | | | | | | 524,248 | | | | | | 646,519 | | |
Other liabilities | | | | | 18,167,460 | | | | | | 6,291,782 | | | | | | 1,062,087 | | |
Liabilities associated with business held for sale (See Note 4) | | | | | 1,141,778 | | | | | | 3,646,867 | | | | | | 21,052,733 | | |
Total liabilities | | | | | 369,756,477 | | | | | | 205,757,138 | | | | | | 69,128,199 | | |
Contingencies and Commitments (See Note 14) | | | | | | | | | | | | | | | | | | | |
Mezzanine Equity: | | | | | | | | | | | | | | | | | | | |
Preferred stock, Series C, $0.001 par value; authorized 1,500,000 shares as of December 31, 2018; none issued and outstanding as of June 30, 2020 and December 31, 2019 | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Stockholders’ Equity: | | | | | | | | | | | | | | | | | | | |
Common stock, $0.001 par value; authorized 1,970,000,000 shares; 1,361,557,779 issued and outstanding as of June 30, 2020 1,023,408,553 as of December 31, 2019 and 22,873,764 issued and outstanding on December 31, 2018 | | | | | 1,361,786 | | | | | | 1,023,409 | | | | | | 22,874 | | |
Additional paid-in capital | | | | | 67,725,643 | | | | | | 53,472,988 | | | | | | 33,006,242 | | |
Accumulated deficit | | | | | (36,070,591) | | | | | | (41,081,710) | | | | | | (35,348,052) | | |
Accumulated other comprehensive (loss) income (See Note 1) | | | | | (7,064,120) | | | | | | 619,584 | | | | | | (1,818,014) | | |
Total Midwest Holding Inc.’s stockholders’ equity | | | | | 25,952,718 | | | | | | 14,034,271 | | | | | | (4,136,950) | | |
Noncontrolling interest | | | | | — | | | | | | 124,477 | | | | | | — | | |
Total stockholders’ equity | | | | | 25,952,718 | | | | | | 14,158,748 | | | | | | (4,136,950) | | |
Total liabilities, mezzanine, and stockholders’ equity | | | | $ | 395,709,195 | | | | | $ | 219,915,886 | | | | | $ | 66,491,249 | | |
|
| | | September 30, 2020 | | | December 31, 2019 | | | December 31, 2018 | | |||||||||
| | | (Unaudited) | | | | | | | | | | | | | | |||
Assets | | | | | | | | | | | | | | | | | | | |
Investments, available for sale, at fair value fixed maturities (amortized cost: $252,836,485, $116,676,312 and $19,226,841, respectively) (See Note 6) | | | | $ | 250,542,950 | | | | | $ | 117,241,861 | | | | | $ | 17,384,183 | | |
Mortgage loans on real estate, held for investment | | | | | 61,464,515 | | | | | | 13,810,041 | | | | | | — | | |
Derivatives instruments (See Note 7) | | | | | 7,664,006 | | | | | | 575,294 | | | | | | — | | |
Other invested assets | | | | | 14,808,870 | | | | | | 2,468,947 | | | | | | — | | |
Preferred stock | | | | | — | | | | | | 500,000 | | | | | | — | | |
Investment escrow | | | | | — | | | | | | 3,899,986 | | | | | | — | | |
Notes receivable | | | | | 5,516,302 | | | | | | — | | | | | | — | | |
Policy loans | | | | | 147,309 | | | | | | 106,014 | | | | | | 43,843 | | |
Total investments | | | | | 340,143,952 | | | | | | 138,602,143 | | | | | | 17,428,026 | | |
Cash and cash equivalents | | | | | 136,431,785 | | | | | | 43,716,205 | | | | | | 2,832,567 | | |
Deferred acquisition costs, net | | | | | 6,398,870 | | | | | | — | | | | | | — | | |
Premiums receivable | | | | | 356,613 | | | | | | 355,959 | | | | | | 346,870 | | |
Accrued investment income | | | | | 4,946,936 | | | | | | 1,511,200 | | | | | | 200,708 | | |
Reinsurance recoverables (See Note 10) | | | | | 42,091,115 | | | | | | 30,579,524 | | | | | | 23,100,644 | | |
Intangible assets | | | | | 700,000 | | | | | | 700,000 | | | | | | 700,000 | | |
Property and equipment, net | | | | | 91,822 | | | | | | 85,395 | | | | | | 91,414 | | |
Operating lease right of use assets | | | | | 378,682 | | | | | | 470,132 | | | | | | 592,065 | | |
Other assets | | | | | 4,006,709 | | | | | | 241,580 | | | | | | 261,884 | | |
Assets associated with business held for sale (See Note 4) | | | | | 1,102,777 | | | | | | 3,653,748 | | | | | | 20,937,071 | | |
Total assets | | | | $ | 536,649,261 | | | | | $ | 219,915,886 | | | | | $ | 66,491,249 | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
Benefit reserves | | | | $ | 16,433,533 | | | | | $ | 16,319,912 | | | | | $ | 16,012,655 | | |
Policy claims | | | | | 98,736 | | | | | | 225,228 | | | | | | 270,785 | | |
Deposit-type contracts (See Note 13) | | | | | 455,429,384 | | | | | | 171,168,785 | | | | | | 7,234,927 | | |
Advance premiums | | | | | 723 | | | | | | 261 | | | | | | 490 | | |
Long-term debt | | | | | — | | | | | | — | | | | | | 18,938,705 | | |
Deferred gain on coinsurance transactions | | | | | 15,739,264 | | | | | | 7,578,195 | | | | | | 3,899,999 | | |
Lease liabilities (See Note 15): | | | | | | | | | | | | | | | | | | | |
Finance lease | | | | | — | | | | | | 1,860 | | | | | | 9,299 | | |
Operating lease | | | | | 428,851 | | | | | | 524,248 | | | | | | 646,519 | | |
Other liabilities | | | | | 22,329,494 | | | | | | 6,291,782 | | | | | | 1,062,087 | | |
Liabilities associated with business held for sale (See Note 4) | | | | | 1,111,113 | | | | | | 3,646,867 | | | | | | 21,052,733 | | |
Total liabilities | | | | | 511,571,098 | | | | | | 205,757,138 | | | | | | 69,128,199 | | |
Contingencies and Commitments (See Note 14) | | | | | | | | | | | | | | | | | | | |
Mezzanine Equity: | | | | | | | | | | | | | | | | | | | |
Preferred stock, Series C, $0.001 par value; authorized 1,500,000 shares as of December 31, 2018; none issued and outstanding as of September 30, 2020 and December 31, 2019 | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Stockholders’ Equity: | | | | | | | | | | | | | | | | | | | |
Voting common stock, $0.001 par value; authorized 20,000,000 shares; 2,718,967 issued and outstanding as of September 30, 2020, 2,042,670 as of December 31, 2019 and 41,601 issued and outstanding on December 31, 2018; non-voting common stock, $0.001 par value; 2,000,000 shares authorized, no shares issued and outstanding at September 30, 2020, December 31, 2019 and December 31, 2018 | | | | | 2,719 | | | | | | 2,042 | | | | | | 41 | | |
Additional paid-in capital | | | | | 69,114,515 | | | | | | 54,494,355 | | | | | | 33,029,075 | | |
Treasury stock | | | | | (175,333) | | | | | | — | | | | | | — | | |
Accumulated deficit | | | | | (41,607,833) | | | | | | (41,081,710) | | | | | | (35,348,052) | | |
Accumulated other comprehensive (loss) income (See Note 1) | | | | | (2,255,905) | | | | | | 619,584 | | | | | | (1,818,014) | | |
Total Midwest Holding Inc.’s stockholders’ equity | | | | | 25,078,163 | | | | | | 14,034,271 | | | | | | (4,136,950) | | |
Noncontrolling interest | | | | | — | | | | | | 124,477 | | | | | | — | | |
Total stockholders’ equity | | | | | 25,078,163 | | | | | | 14,158,748 | | | | | | (4,136,950) | | |
Total liabilities, mezzanine, and stockholders’ equity | | | | $ | 536,649,261 | | | | | $ | 219,915,886 | | | | | $ | 66,491,249 | | |
|
| | Six months ended June 30, | | Year ended December 31, | | | Nine months ended September 30, | | Year ended December 31, | | ||||||||||||||||||||||||||||||||||||||||
| | 2020 | | 2019 | | 2019 | | 2018 | | | 2020 | | 2019 | | 2019 | | 2018 | | ||||||||||||||||||||||||||||||||
| | (unaudited) | | | | | | | | | | | | | (unaudited) | | | | | | | | | | | | ||||||||||||||||||||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Insurance premiums | | | $ | 51 | | | | $ | (2,479) | | | | $ | (152) | | | | $ | 135,387 | | | | | $ | 24 | | | | $ | (152) | | | | $ | (152) | | | | $ | 135,387 | | | ||||||||
Investment income, net of expenses | | | | 843,136 | | | | | 639,010 | | | | | 120,581 | | | | | 515,888 | | | | | | 1,277,337 | | | | | 330,910 | | | | | 120,581 | | | | | 515,888 | | | ||||||||
Net realized gains (losses) on investments (See Note 6) | | | | 9,780,139 | | | | | (3,217) | | | | | 353,602 | | | | | 47,824 | | | |||||||||||||||||||||||||||||
Net realized gains on investments (See Note 6) | | | | 7,829,105 | | | | | 9,315 | | | | | 353,602 | | | | | 47,824 | | | |||||||||||||||||||||||||||||
Amortization of deferred gain on reinsurance | | | | 520,707 | | | | | 1,852,599 | | | | | 2,643,801 | | | | | 117,871 | | | | | | 814,163 | | | | | 2,465,678 | | | | | 2,643,801 | | | | | 117,871 | | | ||||||||
Miscellaneous income | | | | 786,105 | | | | | 82,335 | | | | | 281,956 | | | | | 58,842 | | | | | | 1,493,252 | | | | | 214,633 | | | | | 281,956 | | | | | 58,842 | | | ||||||||
Total revenues | | | | 11,930,138 | | | | | 2,568,248 | | | | | 3,399,788 | | | | | 875,812 | | | | | | 11,413,881 | | | | | 3,020,384 | | | | | 3,399,788 | | | | | 875,812 | | | ||||||||
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Interest credited | | | | 83,150 | | | | | 251,187 | | | | | 6,584 | | | | | 47,936 | | | | | | 463,826 | | | | | 42,895 | | | | | 6,584 | | | | | 47,936 | | | ||||||||
Benefits | | | | (3,087) | | | | | 1,872 | | | | | 34,436 | | | | | 93,646 | | | | | | (5,904) | | | | | 1,872 | | | | | 34,436 | | | �� | | | 93,646 | | | |||||||
Increase in benefit reserves | | | | — | | | | | — | | | | | 34,500 | | | | | (27,121) | | | | | | — | | | | | 34,500 | | | | | 34,500 | | | | | (27,121) | | | ||||||||
Amortization of deferred acquisition costs | | | | 140,897 | | | | | 21,865 | | | | | — | | | | | — | | | | | | 376,179 | | | | | 88,503 | | | | | — | | | | | — | | | ||||||||
Salaries and benefits | | | | 2,179,830 | | | | | 1,115,074 | | | | | 2,701,314 | | | | | 2,160,853 | | | | | | 3,623,605 | | | | | 1,782,708 | | | | | 2,701,314 | | | | | 2,160,853 | | | ||||||||
Other operating expenses | | | | 3,630,800 | | | | | 3,505,120 | | | | | 5,997,955 | | | | | 3,637,748 | | | | | | 5,337,188 | | | | | 4,898,134 | | | | | 5,997,955 | | | | | 3,637,748 | | | ||||||||
Total expenses | | | | 6,031,590 | | | | | 4,895,118 | | | | | 8,774,789 | | | | | 5,913,062 | | | | | | 9,794,894 | | | | | 6,848,612 | | | | | 8,774,789 | | | | | 5,913,062 | | | ||||||||
(Loss) gain from continuing operations before taxes (See note 9) | | | | 5,898,548 | | | | | (2,326,870) | | | | | (5,375,001) | | | | | (5,037,250) | | | |||||||||||||||||||||||||||||
Gain (loss) from continuing operations before taxes (See Note 9) | | | | 1,618,987 | | | | | (3,828,228) | | | | | (5,375,001) | | | | | (5,037,250) | | | |||||||||||||||||||||||||||||
Income tax expense | | | | (887,429) | | | | | — | | | | | (234,180) | | | | | — | | | | | | (2,145,110) | | | | | (114,642) | | | | | (234,180) | | | | | — | | | ||||||||
Net (loss) gain from continued operations | | | | 5,011,119 | | | | | (2,326,870) | | | | | (5,609,181) | | | | | (5,037,250) | | | |||||||||||||||||||||||||||||
Net loss from continued operations | | | | (526,123) | | | | | (3,942,870) | | | | | (5,609,181) | | | | | (5,037,250) | | | |||||||||||||||||||||||||||||
Loss from discontinued operations | | | | — | | | | | — | | | | | — | | | | | (28,284) | | | | | | — | | | | | — | | | | | — | | | | | (28,284) | | | ||||||||
Net (loss) income | | | | 5,011,119 | | | | | (2,326,870) | | | | | (5,609,181) | | | | | (5,065,534) | | | |||||||||||||||||||||||||||||
Net loss | | | | (526,123) | | | | | (3,942,870) | | | | | (5,609,181) | | | | | (5,065,534) | | | |||||||||||||||||||||||||||||
Less: Gain attributable to noncontrolling interest | | | | — | | | | | — | | | | | (124,477) | | | | | — | | | | | | — | | | | | (46,814) | | | | | (124,477) | | | | | — | | | ||||||||
Net (loss) income attributable to Midwest Holding Inc. | | | | 5,011,119 | | | | | (2,326,870) | | | | | (5,733,658) | | | | | (5,065,534) | | | |||||||||||||||||||||||||||||
Comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||
Unrealized (losses) gains on investments arising during period, net of tax | | | | 2,502,690 | | | | | 1,711,156 | | | | | 2,645,015 | | | | | (1,258,971) | | | |||||||||||||||||||||||||||||
Unrealized gains (losses) on foreign currency | | | | (406,255) | | | | | — | | | | | 146,185 | | | | | — | | | |||||||||||||||||||||||||||||
Less: reclassification adjustment for net realized losses (gains) on investments | | | | (9,780,139) | | | | | 3,217 | | | | | (353,602) | | | | | (47,824) | | | |||||||||||||||||||||||||||||
Net loss attributable to Midwest Holding Inc. | | | | (526,123) | | | | | (3,989,684) | | | | | (5,733,658) | | | | | (5,065,534) | | | |||||||||||||||||||||||||||||
Comprehensive (loss) income: | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||
Unrealized gains (losses) on investments arising during period, net of tax | | | | 4,953,616 | | | | | 2,223,929 | | | | | 2,645,015 | | | | | (1,258,971) | | | |||||||||||||||||||||||||||||
Unrealized losses on foreign currency | | | | — | | | | | — | | | | | 146,185 | | | | | — | | | |||||||||||||||||||||||||||||
Less: reclassification adjustment for net realized (gains) losses on investments | | | | (7,829,105) | | | | | (9,315) | | | | | (353,602) | | | | | (47,824) | | | |||||||||||||||||||||||||||||
Other comprehensive (loss) income | | | | (7,683,704) | | | | | 1,714,373 | | | | | 2,437,598 | | | | | (1,306,795) | | | | | | (2,875,489) | | | | | 2,214,614 | | | | | 2,437,598 | | | | | (1,306,795) | | | ||||||||
Comprehensive loss | | | $ | (2,672,585) | | | | $ | (612,497) | | | | $ | (3,296,060) | | | | $ | (6,372,329) | | | | | $ | (3,401,612) | | | | $ | (1,775,070) | | | | $ | (3,296,060) | | | | $ | (6,372,329) | | | ||||||||
Net gain (loss) per common share | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||
Net loss per common share | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||
Basic | | | $ | 0.004 | | | | $ | (0.020) | | | | $ | (0.010) | | | | $ | (0.220) | | | | | $ | (0.22) | | | | $ | (4.71) | | | | $ | (4.99) | | | | $ | (121.77) | | | ||||||||
Diluted | | | $ | 0.004 | | | | $ | (0.019) | | | | $ | (0.010) | | | | $ | (0.005) | | | | | $ | (0.21) | | | | $ | (4.49) | | | | $ | (4.98) | | | | $ | (121.77) | | |
| | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | AOCI* | | | Noncontrolling Interests | | | Total Stockholders’ Equity (Deficit) | | ||||||||||||||||||
Balance, December 31, 2017 | | | | $ | 22,861 | | | | | $ | 33,006,255 | | | | | $ | (30,282,518) | | | | | $ | (511,219) | | | | | $ | — | | | | | $ | 2,235,379 | | |
Preferred stock conversion adjustment | | | | | 13 | | | | | | (13) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Net loss | | | | | — | | | | | | — | | | | | | (5,065,534) | | | | | | — | | | | | | — | | | | | | (5,065,534) | | |
Unrealized losses on investments | | | | | — | | | | | | — | | | | | | — | | | | | | (1,306,795 | | | | | | — | | | | | | (1,306,795) | | |
Balance, December 31, 2018 | | | | | 22,874 | | | | | | 33,006,242 | | | | | | (35,348,052) | | | | | | (1,818,014) | | | | | | — | | | | | | (4,136,950) | | |
Net loss | | | | | — | | | | | | — | | | | | | (5,733,658) | | | | | | — | | | | | | — | | | | | | (5,733,658) | | |
Xenith note interest waived | | | | | — | | | | | | 845,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 845,536 | | |
Xenith note conversion | | | | | 927,680 | | | | | | 18,172,320 | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,100,000 | | |
Class C preferred stock conversion | | | | | 72,855 | | | | | | 1,427,145 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Employee stock options | | | | | — | | | | | | 21,745 | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,745 | | |
Change in equity of noncontrolling interests | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 124,477 | | | | | | 124,477 | | |
Unrealized gains on investments, net of taxes | | | | | — | | | | | | — | | | | | | — | | | | | | 2,291,413 | | | | | | — | | | | | | 2,291,413 | | |
Unrealized gains on foreign currency, net of taxes | | | | | — | | | | | | — | | | | | | — | | | | | | 146,185 | | | | | | — | | | | | | 146,185 | | |
Balance, December 31, 2019 | | | | | 1,023,409 | | | | | | 53,472,988 | | | | | | (41,081,710) | | | | | | 619,584 | | | | | | 124,477 | | | | | | 14,158,748 | | |
Net income | | | | | — | | | | | | — | | | | | | 5,011,119 | | | | | | — | | | | | | — | | | | | | 5,011,119 | | |
Capital raise, net of $285,468 related expenses | | | | | 338,377 | | | | | | 14,603,156 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,941,533 | | |
Employee stock options | | | | | — | | | | | | 25,022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 25,022 | | |
Purchase of remaining 49% of 1505 Capital LLC | | | | | — | | | | | | (375,523) | | | | | | — | | | | | | — | | | | | | (124,477) | | | | | | (500,000) | | |
Unrealized losses on investments | | | | | — | | | | | | — | | | | | | — | | | | | | (7,277,449) | | | | | | — | | | | | | (7,277,449) | | |
Unrealized losses on foreign currency | | | | | — | | | | | | — | | | | | | — | | | | | | (406,255) | | | | | | — | | | | | | (406,255) | | |
Balance, June 30, 2020 (unaudited) | | | | $ | 1,361,786 | | | | | $ | 67,725,643 | | | | | $ | (36,070,591) | | | | | $ | (7,064,120) | | | | | $ | — | | | | | $ | 25,952,718 | | |
|
| | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | AOCI* | | | Noncontrolling Interests | | | Total Stockholders’ Equity (Deficit) | | ||||||||||||||||||
Balance, December 31, 2018 | | | | $ | 22,874 | | | | | $ | 33,006,242 | | | | | $ | (35,348,052) | | | | | $ | (1,818,014) | | | | | $ | — | | | | | $ | (4,136,950) | | |
Net loss | | | | | — | | | | | | — | | | | | | (2,326,870) | | | | | | — | | | | | | — | | | | | | (2,326,870) | | |
Xenith note interest waived | | | | | — | | | | | | 845,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 845,536 | | |
Xenith note conversion | | | | | 927,680 | | | | | | 18,172,320 | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,100,000 | | |
Class C preferred stock conversion | | | | | 72,855 | | | | | | 1,427,145 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Change in equity of noncontrolling interests | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,846 | | | | | | 1,846 | | |
Unrealized gains on investments | | | | | — | | | | | | — | | | | | | — | | | | | | 1,714,373 | | | | | | — | | | | | | 1,714,373 | | |
Balance, June 30, 2019 | | | | $ | 1,023,409 | | | | | $ | 53,451,243 | | | | | $ | (37,674,922) | | | | | $ | (103,641) | | | | | $ | 1,846 | | | | | $ | 16,697,935 | | |
|
| | | Treasury Stock | | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | AOCI* | | | Noncontrolling Interests | | | Total Stockholders’ Equity (Deficit) | | |||||||||||||||||||||
Balance, December 31, 2017 | | | | | — | | | | | $ | 41 | | | | | $ | 33,029,075 | | | | | $ | (30,282,518) | | | | | $ | (511,219) | | | | | $ | — | | | | | $ | 2,235,379 | | |
Preferred stock conversion adjustment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (5,065,534) | | | | | | — | | | | | | — | | | | | | (5,065,534) | | |
Unrealized losses on investments | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,306,795 | | | | | | — | | | | | | (1,306,795) | | |
Balance, December 31, 2018 | | | | | — | | | | | | 41 | | | | | | 33,029,075 | | | | | | (35,348,052) | | | | | | (1,818,014) | | | | | | — | | | | | | (4,136,950) | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (5,733,658) | | | | | | — | | | | | | — | | | | | | (5,733,658) | | |
Xenith note interest waived | | | | | — | | | | | | — | | | | | | 845,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 845,536 | | |
Xenith note conversion | | | | | — | | | | | | 1,855 | | | | | | 19,098,145 | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,100,000 | | |
Class C preferred stock conversion | | | | | — | | | | | | 146 | | | | | | 1,499,854 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Employee stock options | | | | | — | | | | | | — | | | | | | 21,745 | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,745 | | |
Change in equity of noncontrolling interests | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 124,477 | | | | | | 124,477 | | |
Unrealized gains on investments, net of taxes | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,291,413 | | | | | | — | | | | | | 2,291,413 | | |
Unrealized gains on foreign currency, net of taxes | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 146,185 | | | | | | — | | | | | | 146,185 | | |
Balance, December 31, 2019 | | | | | — | | | | | | 2,042 | | | | | | 54,494,355 | | | | | | (41,081,710) | | | | | | 619,584 | | | | | | 124,477 | | | | | | 14,158,748 | | |
Net income | | | | | | | | | | | — | | | | | | — | | | | | | (526,123) | | | | | | — | | | | | | — | | | | | | (526,123) | | |
Capital raise, net of $285,468 related expenses | | | | | — | | | | | | 677 | | | | | | 14,940,856 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,941,533 | | |
Reverse stock split fractions retire | | | | | (175,333) | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | (175,333) | | |
Employee stock options | | | | | — | | | | | | | | | | | | 54,827 | | | | | | | | | | | | | | | | | | | | | | | | 54,827 | | |
Purchase of remaining 49% of 1505 Capital LLC | | | | | — | | | | | | — | | | | | | (375,523) | | | | | | — | | | | | | — | | | | | | (124,477) | | | | | | (500,000) | | |
Unrealized losses on investments | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,875,489) | | | | | | — | | | | | | (2,875,489) | | |
Balance, September 30, 2020 (unaudited) | | | | | (175,333) | | | | | $ | 2,719 | | | | | $ | 69,114,515 | | | | | $ | (41,607,833) | | | | | $ | (2,255,905) | | | | | $ | — | | | | | $ | 25,078,163 | | |
|
| | | Treasury Stock | | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | AOCI* | | | Noncontrolling Interests | | | Total Stockholders’ Equity (Deficit) | | |||||||||||||||||||||
Balance, December 31, 2018 | | | | | — | | | | | $ | 41 | | | | | $ | 33,029,075 | | | | | $ | (35,348,052) | | | | | $ | (1,818,014) | | | | | $ | — | | | | | $ | (4,136,950) | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (3,989,684) | | | | | | — | | | | | | — | | | | | | (3,989,684) | | |
Xenith note interest waived | | | | | — | | | | | | — | | | | | | 845,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 845,536 | | |
Xenith note conversion | | | | | — | | | | | | 1,855 | | | | | | 19,098,145 | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,100,000 | | |
Class C preferred stock conversion | | | | | — | | | | | | 146 | | | | | | 1,499,854 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Change in equity of noncontrolling interests | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 48,661 | | | | | | 48,661 | | |
Unrealized gains on investments | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,214,614 | | | | | | — | | | | | | 2,214,614 | | |
Balance, September 30, 2019 | | | | $ | — | | | | | $ | 2,042 | | | | | $ | 54,472,610 | | | | | $ | (39,337,736) | | | | | $ | 396,600 | | | | | $ | 48,661 | | | | | $ | 15,582,177 | | |
|
| | | Six months ended June 30, | | | Year ended December 31, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2019 | | | 2018 | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Cash Flows from Operating Activities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net (loss) income | | | | $ | 5,011,119 | | | | | $ | (2,326,870) | | | | | $ | (5,733,658) | | | | | $ | (5,065,534) | | |
Adjustments to arrive at cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net premium and discount on investments | | | | | 104,947 | | | | | | 49,751 | | | | | | 113,880 | | | | | | 102,285 | | |
Depreciation and amortization | | | | | 804,289 | | | | | | 32,254 | | | | | | 58,761 | | | | | | 147,761 | | |
Stock options | | | | | 25,022 | | | | | | — | | | | | | 21,745 | | | | | | — | | |
Net transfers to noncontrolling interest | | | | | | | | | | | | | | | | | 124,477 | | | | | | | | |
Amortization of deferred acquisition costs | | | | | 140,897 | | | | | | 21,865 | | | | | | — | | | | | | — | | |
Deferred acquisition costs capitalized | | | | | (4,118,436) | | | | | | (1,157,073) | | | | | | — | | | | | | — | | |
Net realized (gains) losses on investments | | | | | (9,780,139) | | | | | | 4,142 | | | | | | (353,602) | | | | | | 334,928 | | |
Deferred coinsurance ceding commission | | | | | 3,908,889 | | | | | | (1,838,878) | | | | | | 3,678,196 | | | | | | 2,944,572 | | |
Notes payable interest accrued | | | | | — | | | | | | 845,536 | | | | | | 845,536 | | | | | | — | | |
Commutation of assumed business | | | | | — | | | | | | — | | | | | | — | | | | | | (2,544,929) | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Reinsurance recoverables | | | | | (4,304,381) | | | | | | (404,451) | | | | | | (7,478,880) | | | | | | (707,419) | | |
Interest and dividends due and accrued | | | | | (1,960,229) | | | | | | (255,955) | | | | | | (1,310,492) | | | | | | 22,458 | | |
Premiums receivable | | | | | 6,310 | | | | | | (12,861) | | | | | | (9,089) | | | | | | 21,507 | | |
Policy liabilities | | | | | 3,958,101 | | | | | | 672,825 | | | | | | 2,963,219 | | | | | | 254,614 | | |
Other assets and liabilities | | | | | 8,678,265 | | | | | | (421,469) | | | | | | 4,745,274 | | | | | | 175,344 | | |
Other assets and liabilities – discontinued operations | | | | | 6,280 | | | | | | (120,419) | | | | | | (122,543) | | | | | | (16,055,335) | | |
Net cash (used in) or provided by for operating activities | | | | | 2,480,934 | | | | | | (4,911,603) | | | | | | (2,457,176) | | | | | | (20,369,748) | | |
Cash Flows from Investing Activities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Purchases | | | | | (107,759,107) | | | | | | (24,117,739) | | | | | | (103,078,444) | | | | | | (8,382,284) | | |
Proceeds from sale or maturity | | | | | 18,409,038 | | | | | | 2,406,165 | | | | | | 5,780,475 | | | | | | 10,243,118 | | |
Mortgage loans on real estate, held for investment purchases | | | | | | | | | | | | | | | | | | | | | | | | | |
Purchases | | | | | (35,531,866) | | | | | | (4,176,039) | | | | | | (15,036,179) | | | | | | — | | |
Proceeds from sale | | | | | 2,069,950 | | | | | | — | | | | | | 1,226,138 | | | | | | — | | |
Purchases of derivatives | | | | | (2,643,989) | | | | | | — | | | | | | (490,831) | | | | | | — | | |
Other invested assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Purchases | | | | | (7,011,102) | | | | | | — | | | | | | (20,533,761) | | | | | | (100,000) | | |
Proceeds from sale | | | | | 5,612,112 | | | | | | — | | | | | | 14,849,555 | | | | | | 104,892 | | |
Preferred stock purchased | | | | | — | | | | | | — | | | | | | (500,000) | | | | | | — | | |
Notes receivable | | | | | (5,488,101) | | | | | | — | | | | | | — | | | | | | — | | |
Net change in policy loans | | | | | (35,158) | | | | | | 589 | | | | | | (62,171) | | | | | | 9,630 | | |
| | | Six months ended June 30, | | | Year ended December 31, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2019 | | | 2018 | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Net purchases of property and equipment | | | | | (45,513) | | | | | | (17,348) | | | | | | (45,634) | | | | | | (12,747) | | |
Net cash provided (used in) by investing activities | | | | | (132,423,736) | | | | | | (25,904,372) | | | | | | (117,890,852) | | | | | | 1,862,609 | | |
Cash Flows from Financing Activities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Finance lease | | | | | (111) | | | | | | (222) | | | | | | (444) | | | | | | (444) | | |
Proceeds from issuance of preferred stock | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Proceeds from issuance of notes payable | | | | | — | | | | | | — | | | | | | — | | | | | | 18,938,705 | | |
Capital contribution | | | | | 14,941,533 | | | | | | — | | | | | | — | | | | | | — | | |
1505 Capital LLC purchase | | | | | (500,000) | | | | | | — | | | | | | — | | | | | | — | | |
Net transfers to noncontrolling interest | | | | | — | | | | | | 1,846 | | | | | | — | | | | | | — | | |
Receipts on deposit-type contracts | | | | | 147,486,013 | | | | | | 38,267,011 | | | | | | 161,392,700 | | | | | | 650 | | |
Withdrawals on deposit-type contracts | | | | | (658,936) | | | | | | (11,003) | | | | | | (160,590) | | | | | | (50,732) | | |
Net cash provided by financing activities | | | | | 161,268,499 | | | | | | 38,257,632 | | | | | | 161,231,666 | | | | | | 20,388,179 | | |
Net increase in cash and cash equivalents | | | | | 31,325,697 | | | | | | 7,441,657 | | | | | | 40,883,638 | | | | | | 1,881,040 | | |
Cash and cash equivalents: | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning | | | | | 43,716,205 | | | | | | 2,832,567 | | | | | | 2,832,567 | | | | | | 951,527 | | |
Ending | | | | $ | 75,041,902 | | | | | $ | 10,274,224 | | | | | $ | 43,716,205 | | | | | $ | 2,832,567 | | |
Supplemental Disclosure of Non-Cash Information | | | | | | | | | | | | | | | | | | | | | | | | | |
Settlement of real estate and surplus notes: | | | | | — | | | | | | — | | | | | | — | | | | | | 493,648 | | |
Book value of real estate settled | | | | | — | | | | | | — | | | | | | — | | | | | | (876,400) | | |
Book value of surplus notes (including interest) | | | | | — | | | | | | — | | | | | | — | | | | | | 382,752 | | |
Book value of note payable | | | | | — | | | | | | (19,100,000) | | | | | | (19,100,000) | | | | | | — | | |
Common stock | | | | | — | | | | | | 927,680 | | | | | | 927,680 | | | | | | — | | |
Additional paid in capital | | | | | — | | | | | | 18,172,320 | | | | | | 18,172,320 | | | | | | — | | |
Conversion of preferred stock | | | | | | | | | | | | | | | | | | | | | | | | | |
Book value of preferred stock | | | | | — | | | | | | (1,500,000) | | | | | | (1,500,000) | | | | | | — | | |
Common stock | | | | | — | | | | | | 72,855 | | | | | | 72,855 | | | | | | — | | |
Additional paid in capital | | | | | — | | | | | | 1,427,145 | | | | | | 1,427,145 | | | | | | — | | |
| | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
|
Underwriter | | | Number of Shares | |
Piper Sandler & Co. | | | | |
| | | | | | Total | | |||
| | | Per Share | | | Without Option | | | With Option | |
Public offering price | | | | | | | | | | |
Underwriting discounts and commissions | | | | | | | | | | |
Proceeds, before expenses, to us | | | | | | | | | | |
| | | | | F-2 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-9 | | |
| | | September 30, 2020 | | | December 31, 2019 | | | December 31, 2018 | | |||||||||
| | | (Unaudited) | | | | | | | | | | | | | | |||
Assets | | | | | | | | | | | | | | | | | | | |
Investments, available for sale, at fair value fixed maturities (amortized cost: $252,836,485, $116,676,312 and $19,226,841, respectively) (See Note 6) | | | | $ | 250,542,950 | | | | | $ | 117,241,861 | | | | | $ | 17,384,183 | | |
Mortgage loans on real estate, held for investment | | | | | 61,464,515 | | | | | | 13,810,041 | | | | | | — | | |
Derivatives instruments (See Note 7) | | | | | 7,664,006 | | | | | | 575,294 | | | | | | — | | |
Other invested assets | | | | | 14,808,870 | | | | | | 2,468,947 | | | | | | — | | |
Preferred stock | | | | | — | | | | | | 500,000 | | | | | | — | | |
Investment escrow | | | | | — | | | | | | 3,899,986 | | | | | | — | | |
Notes receivable | | | | | 5,516,302 | | | | | | — | | | | | | — | | |
Policy loans | | | | | 147,309 | | | | | | 106,014 | | | | | | 43,843 | | |
Total investments | | | | | 340,143,952 | | | | | | 138,602,143 | | | | | | 17,428,026 | | |
Cash and cash equivalents | | | | | 136,431,785 | | | | | | 43,716,205 | | | | | | 2,832,567 | | |
Deferred acquisition costs, net | | | | | 6,398,870 | | | | | | — | | | | | | — | | |
Premiums receivable | | | | | 356,613 | | | | | | 355,959 | | | | | | 346,870 | | |
Accrued investment income | | | | | 4,946,936 | | | | | | 1,511,200 | | | | | | 200,708 | | |
Reinsurance recoverables (See Note 10) | | | | | 42,091,115 | | | | | | 30,579,524 | | | | | | 23,100,644 | | |
Intangible assets | | | | | 700,000 | | | | | | 700,000 | | | | | | 700,000 | | |
Property and equipment, net | | | | | 91,822 | | | | | | 85,395 | | | | | | 91,414 | | |
Operating lease right of use assets | | | | | 378,682 | | | | | | 470,132 | | | | | | 592,065 | | |
Other assets | | | | | 4,006,709 | | | | | | 241,580 | | | | | | 261,884 | | |
Assets associated with business held for sale (See Note 4) | | | | | 1,102,777 | | | | | | 3,653,748 | | | | | | 20,937,071 | | |
Total assets | | | | $ | 536,649,261 | | | | | $ | 219,915,886 | | | | | $ | 66,491,249 | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
Benefit reserves | | | | $ | 16,433,533 | | | | | $ | 16,319,912 | | | | | $ | 16,012,655 | | |
Policy claims | | | | | 98,736 | | | | | | 225,228 | | | | | | 270,785 | | |
Deposit-type contracts (See Note 13) | | | | | 455,429,384 | | | | | | 171,168,785 | | | | | | 7,234,927 | | |
Advance premiums | | | | | 723 | | | | | | 261 | | | | | | 490 | | |
Long-term debt | | | | | — | | | | | | — | | | | | | 18,938,705 | | |
Deferred gain on coinsurance transactions | | | | | 15,739,264 | | | | | | 7,578,195 | | | | | | 3,899,999 | | |
Lease liabilities (See Note 15): | | | | | | | | | | | | | | | | | | | |
Finance lease | | | | | — | | | | | | 1,860 | | | | | | 9,299 | | |
Operating lease | | | | | 428,851 | | | | | | 524,248 | | | | | | 646,519 | | |
Other liabilities | | | | | 22,329,494 | | | | | | 6,291,782 | | | | | | 1,062,087 | | |
Liabilities associated with business held for sale (See Note 4) | | | | | 1,111,113 | | | | | | 3,646,867 | | | | | | 21,052,733 | | |
Total liabilities | | | | | 511,571,098 | | | | | | 205,757,138 | | | | | | 69,128,199 | | |
Contingencies and Commitments (See Note 14) | | | | | | | | | | | | | | | | | | | |
Mezzanine Equity: | | | | | | | | | | | | | | | | | | | |
Preferred stock, Series C, $0.001 par value; authorized 1,500,000 shares as of December 31, 2018; none issued and outstanding as of September 30, 2020 and December 31, 2019 | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Stockholders’ Equity: | | | | | | | | | | | | | | | | | | | |
Voting common stock, $0.001 par value; authorized 20,000,000 shares; 2,718,967 issued and outstanding as of September 30, 2020, 2,042,670 as of December 31, 2019 and 41,601 issued and outstanding on December 31, 2018; non-voting common stock, $0.001 par value; 2,000,000 shares authorized, no shares issued and outstanding at September 30, 2020, December 31, 2019 and December 31, 2018 | | | | | 2,719 | | | | | | 2,042 | | | | | | 41 | | |
Additional paid-in capital | | | | | 69,114,515 | | | | | | 54,494,355 | | | | | | 33,029,075 | | |
Treasury stock | | | | | (175,333) | | | | | | — | | | | | | — | | |
Accumulated deficit | | | | | (41,607,833) | | | | | | (41,081,710) | | | | | | (35,348,052) | | |
Accumulated other comprehensive (loss) income (See Note 1) | | | | | (2,255,905) | | | | | | 619,584 | | | | | | (1,818,014) | | |
Total Midwest Holding Inc.’s stockholders’ equity | | | | | 25,078,163 | | | | | | 14,034,271 | | | | | | (4,136,950) | | |
Noncontrolling interest | | | | | — | | | | | | 124,477 | | | | | | — | | |
Total stockholders’ equity | | | | | 25,078,163 | | | | | | 14,158,748 | | | | | | (4,136,950) | | |
Total liabilities, mezzanine, and stockholders’ equity | | | | $ | 536,649,261 | | | | | $ | 219,915,886 | | | | | $ | 66,491,249 | | |
|
| | | Nine months ended September 30, | | | Year ended December 31, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2019 | | | 2018 | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | |
Insurance premiums | | | | $ | 24 | | | | | $ | (152) | | | | | $ | (152) | | | | | $ | 135,387 | | |
Investment income, net of expenses | | | | | 1,277,337 | | | | | | 330,910 | | | | | | 120,581 | | | | | | 515,888 | | |
Net realized gains on investments (See Note 6) | | | | | 7,829,105 | | | | | | 9,315 | | | | | | 353,602 | | | | | | 47,824 | | |
Amortization of deferred gain on reinsurance | | | | | 814,163 | | | | | | 2,465,678 | | | | | | 2,643,801 | | | | | | 117,871 | | |
Miscellaneous income | | | | | 1,493,252 | | | | | | 214,633 | | | | | | 281,956 | | | | | | 58,842 | | |
Total revenues | | | | | 11,413,881 | | | | | | 3,020,384 | | | | | | 3,399,788 | | | | | | 875,812 | | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest credited | | | | | 463,826 | | | | | | 42,895 | | | | | | 6,584 | | | | | | 47,936 | | |
Benefits | | | | | (5,904) | | | | | | 1,872 | | | | | | 34,436 | | | �� | | | 93,646 | | |
Increase in benefit reserves | | | | | — | | | | | | 34,500 | | | | | | 34,500 | | | | | | (27,121) | | |
Amortization of deferred acquisition costs | | | | | 376,179 | | | | | | 88,503 | | | | | | — | | | | | | — | | |
Salaries and benefits | | | | | 3,623,605 | | | | | | 1,782,708 | | | | | | 2,701,314 | | | | | | 2,160,853 | | |
Other operating expenses | | | | | 5,337,188 | | | | | | 4,898,134 | | | | | | 5,997,955 | | | | | | 3,637,748 | | |
Total expenses | | | | | 9,794,894 | | | | | | 6,848,612 | | | | | | 8,774,789 | | | | | | 5,913,062 | | |
Gain (loss) from continuing operations before taxes (See Note 9) | | | | | 1,618,987 | | | | | | (3,828,228) | | | | | | (5,375,001) | | | | | | (5,037,250) | | |
Income tax expense | | | | | (2,145,110) | | | | | | (114,642) | | | | | | (234,180) | | | | | | — | | |
Net loss from continued operations | | | | | (526,123) | | | | | | (3,942,870) | | | | | | (5,609,181) | | | | | | (5,037,250) | | |
Loss from discontinued operations | | | | | — | | | | | | — | | | | | | — | | | | | | (28,284) | | |
Net loss | | | | | (526,123) | | | | | | (3,942,870) | | | | | | (5,609,181) | | | | | | (5,065,534) | | |
Less: Gain attributable to noncontrolling interest | | | | | — | | | | | | (46,814) | | | | | | (124,477) | | | | | | — | | |
Net loss attributable to Midwest Holding Inc. | | | | | (526,123) | | | | | | (3,989,684) | | | | | | (5,733,658) | | | | | | (5,065,534) | | |
Comprehensive (loss) income: | | | | | | | | | | | | | | | | | | | | | | | | | |
Unrealized gains (losses) on investments arising during period, net of tax | | | | | 4,953,616 | | | | | | 2,223,929 | | | | | | 2,645,015 | | | | | | (1,258,971) | | |
Unrealized losses on foreign currency | | | | | — | | | | | | — | | | | | | 146,185 | | | | | | — | | |
Less: reclassification adjustment for net realized (gains) losses on investments | | | | | (7,829,105) | | | | | | (9,315) | | | | | | (353,602) | | | | | | (47,824) | | |
Other comprehensive (loss) income | | | | | (2,875,489) | | | | | | 2,214,614 | | | | | | 2,437,598 | | | | | | (1,306,795) | | |
Comprehensive loss | | | | $ | (3,401,612) | | | | | $ | (1,775,070) | | | | | $ | (3,296,060) | | | | | $ | (6,372,329) | | |
Net loss per common share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | (0.22) | | | | | $ | (4.71) | | | | | $ | (4.99) | | | | | $ | (121.77) | | |
Diluted | | | | $ | (0.21) | | | | | $ | (4.49) | | | | | $ | (4.98) | | | | | $ | (121.77) | | |
| | | Treasury Stock | | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | AOCI* | | | Noncontrolling Interests | | | Total Stockholders’ Equity (Deficit) | | |||||||||||||||||||||
Balance, December 31, 2017 | | | | | — | | | | | $ | 41 | | | | | $ | 33,029,075 | | | | | $ | (30,282,518) | | | | | $ | (511,219) | | | | | $ | — | | | | | $ | 2,235,379 | | |
Preferred stock conversion adjustment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (5,065,534) | | | | | | — | | | | | | — | | | | | | (5,065,534) | | |
Unrealized losses on investments | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,306,795 | | | | | | — | | | | | | (1,306,795) | | |
Balance, December 31, 2018 | | | | | — | | | | | | 41 | | | | | | 33,029,075 | | | | | | (35,348,052) | | | | | | (1,818,014) | | | | | | — | | | | | | (4,136,950) | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (5,733,658) | | | | | | — | | | | | | — | | | | | | (5,733,658) | | |
Xenith note interest waived | | | | | — | | | | | | — | | | | | | 845,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 845,536 | | |
Xenith note conversion | | | | | — | | | | | | 1,855 | | | | | | 19,098,145 | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,100,000 | | |
Class C preferred stock conversion | | | | | — | | | | | | 146 | | | | | | 1,499,854 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Employee stock options | | | | | — | | | | | | — | | | | | | 21,745 | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,745 | | |
Change in equity of noncontrolling interests | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 124,477 | | | | | | 124,477 | | |
Unrealized gains on investments, net of taxes | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,291,413 | | | | | | — | | | | | | 2,291,413 | | |
Unrealized gains on foreign currency, net of taxes | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 146,185 | | | | | | — | | | | | | 146,185 | | |
Balance, December 31, 2019 | | | | | — | | | | | | 2,042 | | | | | | 54,494,355 | | | | | | (41,081,710) | | | | | | 619,584 | | | | | | 124,477 | | | | | | 14,158,748 | | |
Net income | | | | | | | | | | | — | | | | | | — | | | | | | (526,123) | | | | | | — | | | | | | — | | | | | | (526,123) | | |
Capital raise, net of $285,468 related expenses | | | | | — | | | | | | 677 | | | | | | 14,940,856 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,941,533 | | |
Reverse stock split fractions retire | | | | | (175,333) | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | (175,333) | | |
Employee stock options | | | | | — | | | | | | | | | | | | 54,827 | | | | | | | | | | | | | | | | | | | | | | | | 54,827 | | |
Purchase of remaining 49% of 1505 Capital LLC | | | | | — | | | | | | — | | | | | | (375,523) | | | | | | — | | | | | | — | | | | | | (124,477) | | | | | | (500,000) | | |
Unrealized losses on investments | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,875,489) | | | | | | — | | | | | | (2,875,489) | | |
Balance, September 30, 2020 (unaudited) | | | | | (175,333) | | | | | $ | 2,719 | | | | | $ | 69,114,515 | | | | | $ | (41,607,833) | | | | | $ | (2,255,905) | | | | | $ | — | | | | | $ | 25,078,163 | | |
|
| | | Treasury Stock | | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | AOCI* | | | Noncontrolling Interests | | | Total Stockholders’ Equity (Deficit) | | |||||||||||||||||||||
Balance, December 31, 2018 | | | | | — | | | | | $ | 41 | | | | | $ | 33,029,075 | | | | | $ | (35,348,052) | | | | | $ | (1,818,014) | | | | | $ | — | | | | | $ | (4,136,950) | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (3,989,684) | | | | | | — | | | | | | — | | | | | | (3,989,684) | | |
Xenith note interest waived | | | | | — | | | | | | — | | | | | | 845,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 845,536 | | |
Xenith note conversion | | | | | — | | | | | | 1,855 | | | | | | 19,098,145 | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,100,000 | | |
Class C preferred stock conversion | | | | | — | | | | | | 146 | | | | | | 1,499,854 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Change in equity of noncontrolling interests | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 48,661 | | | | | | 48,661 | | |
Unrealized gains on investments | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,214,614 | | | | | | — | | | | | | 2,214,614 | | |
Balance, September 30, 2019 | | | | $ | — | | | | | $ | 2,042 | | | | | $ | 54,472,610 | | | | | $ | (39,337,736) | | | | | $ | 396,600 | | | | | $ | 48,661 | | | | | $ | 15,582,177 | | |
|
Underwriter | | | Number of Shares | |
Piper Sandler & Co. | | | | |
| | | | | | Total | | |||
| | | Per Share | | | Without Option | | | With Option | |
Public offering price | | | | | | | | | | |
Underwriting discounts and commissions | | | | | | | | | | |
Proceeds, before expenses, to us | | | | | | | | | | |
| | | | | F-2 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-9 | | |
| | | September 30, 2020 | | | December 31, 2019 | | | December 31, 2018 | | |||||||||
| | | (Unaudited) | | | | | | | | | | | | | | |||
Assets | | | | | | | | | | | | | | | | | | | |
Investments, available for sale, at fair value fixed maturities (amortized cost: $252,836,485, $116,676,312 and $19,226,841, respectively) (See Note 6) | | | | $ | 250,542,950 | | | | | $ | 117,241,861 | | | | | $ | 17,384,183 | | |
Mortgage loans on real estate, held for investment | | | | | 61,464,515 | | | | | | 13,810,041 | | | | | | — | | |
Derivatives instruments (See Note 7) | | | | | 7,664,006 | | | | | | 575,294 | | | | | | — | | |
Other invested assets | | | | | 14,808,870 | | | | | | 2,468,947 | | | | | | — | | |
Preferred stock | | | | | — | | | | | | 500,000 | | | | | | — | | |
Investment escrow | | | | | — | | | | | | 3,899,986 | | | | | | — | | |
Notes receivable | | | | | 5,516,302 | | | | | | — | | | | | | — | | |
Policy loans | | | | | 147,309 | | | | | | 106,014 | | | | | | 43,843 | | |
Total investments | | | | | 340,143,952 | | | | | | 138,602,143 | | | | | | 17,428,026 | | |
Cash and cash equivalents | | | | | 136,431,785 | | | | | | 43,716,205 | | | | | | 2,832,567 | | |
Deferred acquisition costs, net | | | | | 6,398,870 | | | | | | — | | | | | | — | | |
Premiums receivable | | | | | 356,613 | | | | | | 355,959 | | | | | | 346,870 | | |
Accrued investment income | | | | | 4,946,936 | | | | | | 1,511,200 | | | | | | 200,708 | | |
Reinsurance recoverables (See Note 10) | | | | | 42,091,115 | | | | | | 30,579,524 | | | | | | 23,100,644 | | |
Intangible assets | | | | | 700,000 | | | | | | 700,000 | | | | | | 700,000 | | |
Property and equipment, net | | | | | 91,822 | | | | | | 85,395 | | | | | | 91,414 | | |
Operating lease right of use assets | | | | | 378,682 | | | | | | 470,132 | | | | | | 592,065 | | |
Other assets | | | | | 4,006,709 | | | | | | 241,580 | | | | | | 261,884 | | |
Assets associated with business held for sale (See Note 4) | | | | | 1,102,777 | | | | | | 3,653,748 | | | | | | 20,937,071 | | |
Total assets | | | | $ | 536,649,261 | | | | | $ | 219,915,886 | | | | | $ | 66,491,249 | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
Benefit reserves | | | | $ | 16,433,533 | | | | | $ | 16,319,912 | | | | | $ | 16,012,655 | | |
Policy claims | | | | | 98,736 | | | | | | 225,228 | | | | | | 270,785 | | |
Deposit-type contracts (See Note 13) | | | | | 455,429,384 | | | | | | 171,168,785 | | | | | | 7,234,927 | | |
Advance premiums | | | | | 723 | | | | | | 261 | | | | | | 490 | | |
Long-term debt | | | | | — | | | | | | — | | | | | | 18,938,705 | | |
Deferred gain on coinsurance transactions | | | | | 15,739,264 | | | | | | 7,578,195 | | | | | | 3,899,999 | | |
Lease liabilities (See Note 15): | | | | | | | | | | | | | | | | | | | |
Finance lease | | | | | — | | | | | | 1,860 | | | | | | 9,299 | | |
Operating lease | | | | | 428,851 | | | | | | 524,248 | | | | | | 646,519 | | |
Other liabilities | | | | | 22,329,494 | | | | | | 6,291,782 | | | | | | 1,062,087 | | |
Liabilities associated with business held for sale (See Note 4) | | | | | 1,111,113 | | | | | | 3,646,867 | | | | | | 21,052,733 | | |
Total liabilities | | | | | 511,571,098 | | | | | | 205,757,138 | | | | | | 69,128,199 | | |
Contingencies and Commitments (See Note 14) | | | | | | | | | | | | | | | | | | | |
Mezzanine Equity: | | | | | | | | | | | | | | | | | | | |
Preferred stock, Series C, $0.001 par value; authorized 1,500,000 shares as of December 31, 2018; none issued and outstanding as of September 30, 2020 and December 31, 2019 | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Stockholders’ Equity: | | | | | | | | | | | | | | | | | | | |
Voting common stock, $0.001 par value; authorized 20,000,000 shares; 2,718,967 issued and outstanding as of September 30, 2020, 2,042,670 as of December 31, 2019 and 41,601 issued and outstanding on December 31, 2018; non-voting common stock, $0.001 par value; 2,000,000 shares authorized, no shares issued and outstanding at September 30, 2020, December 31, 2019 and December 31, 2018 | | | | | 2,719 | | | | | | 2,042 | | | | | | 41 | | |
Additional paid-in capital | | | | | 69,114,515 | | | | | | 54,494,355 | | | | | | 33,029,075 | | |
Treasury stock | | | | | (175,333) | | | | | | — | | | | | | — | | |
Accumulated deficit | | | | | (41,607,833) | | | | | | (41,081,710) | | | | | | (35,348,052) | | |
Accumulated other comprehensive (loss) income (See Note 1) | | | | | (2,255,905) | | | | | | 619,584 | | | | | | (1,818,014) | | |
Total Midwest Holding Inc.’s stockholders’ equity | | | | | 25,078,163 | | | | | | 14,034,271 | | | | | | (4,136,950) | | |
Noncontrolling interest | | | | | — | | | | | | 124,477 | | | | | | — | | |
Total stockholders’ equity | | | | | 25,078,163 | | | | | | 14,158,748 | | | | | | (4,136,950) | | |
Total liabilities, mezzanine, and stockholders’ equity | | | | $ | 536,649,261 | | | | | $ | 219,915,886 | | | | | $ | 66,491,249 | | |
|
| | | Nine months ended September 30, | | | Year ended December 31, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2019 | | | 2018 | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | |
Insurance premiums | | | | $ | 24 | | | | | $ | (152) | | | | | $ | (152) | | | | | $ | 135,387 | | |
Investment income, net of expenses | | | | | 1,277,337 | | | | | | 330,910 | | | | | | 120,581 | | | | | | 515,888 | | |
Net realized gains on investments (See Note 6) | | | | | 7,829,105 | | | | | | 9,315 | | | | | | 353,602 | | | | | | 47,824 | | |
Amortization of deferred gain on reinsurance | | | | | 814,163 | | | | | | 2,465,678 | | | | | | 2,643,801 | | | | | | 117,871 | | |
Miscellaneous income | | | | | 1,493,252 | | | | | | 214,633 | | | | | | 281,956 | | | | | | 58,842 | | |
Total revenues | | | | | 11,413,881 | | | | | | 3,020,384 | | | | | | 3,399,788 | | | | | | 875,812 | | |
Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest credited | | | | | 463,826 | | | | | | 42,895 | | | | | | 6,584 | | | | | | 47,936 | | |
Benefits | | | | | (5,904) | | | | | | 1,872 | | | | | | 34,436 | | | �� | | | 93,646 | | |
Increase in benefit reserves | | | | | — | | | | | | 34,500 | | | | | | 34,500 | | | | | | (27,121) | | |
Amortization of deferred acquisition costs | | | | | 376,179 | | | | | | 88,503 | | | | | | — | | | | | | — | | |
Salaries and benefits | | | | | 3,623,605 | | | | | | 1,782,708 | | | | | | 2,701,314 | | | | | | 2,160,853 | | |
Other operating expenses | | | | | 5,337,188 | | | | | | 4,898,134 | | | | | | 5,997,955 | | | | | | 3,637,748 | | |
Total expenses | | | | | 9,794,894 | | | | | | 6,848,612 | | | | | | 8,774,789 | | | | | | 5,913,062 | | |
Gain (loss) from continuing operations before taxes (See Note 9) | | | | | 1,618,987 | | | | | | (3,828,228) | | | | | | (5,375,001) | | | | | | (5,037,250) | | |
Income tax expense | | | | | (2,145,110) | | | | | | (114,642) | | | | | | (234,180) | | | | | | — | | |
Net loss from continued operations | | | | | (526,123) | | | | | | (3,942,870) | | | | | | (5,609,181) | | | | | | (5,037,250) | | |
Loss from discontinued operations | | | | | — | | | | | | — | | | | | | — | | | | | | (28,284) | | |
Net loss | | | | | (526,123) | | | | | | (3,942,870) | | | | | | (5,609,181) | | | | | | (5,065,534) | | |
Less: Gain attributable to noncontrolling interest | | | | | — | | | | | | (46,814) | | | | | | (124,477) | | | | | | — | | |
Net loss attributable to Midwest Holding Inc. | | | | | (526,123) | | | | | | (3,989,684) | | | | | | (5,733,658) | | | | | | (5,065,534) | | |
Comprehensive (loss) income: | | | | | | | | | | | | | | | | | | | | | | | | | |
Unrealized gains (losses) on investments arising during period, net of tax | | | | | 4,953,616 | | | | | | 2,223,929 | | | | | | 2,645,015 | | | | | | (1,258,971) | | |
Unrealized losses on foreign currency | | | | | — | | | | | | — | | | | | | 146,185 | | | | | | — | | |
Less: reclassification adjustment for net realized (gains) losses on investments | | | | | (7,829,105) | | | | | | (9,315) | | | | | | (353,602) | | | | | | (47,824) | | |
Other comprehensive (loss) income | | | | | (2,875,489) | | | | | | 2,214,614 | | | | | | 2,437,598 | | | | | | (1,306,795) | | |
Comprehensive loss | | | | $ | (3,401,612) | | | | | $ | (1,775,070) | | | | | $ | (3,296,060) | | | | | $ | (6,372,329) | | |
Net loss per common share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | (0.22) | | | | | $ | (4.71) | | | | | $ | (4.99) | | | | | $ | (121.77) | | |
Diluted | | | | $ | (0.21) | | | | | $ | (4.49) | | | | | $ | (4.98) | | | | | $ | (121.77) | | |
| | | Treasury Stock | | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | AOCI* | | | Noncontrolling Interests | | | Total Stockholders’ Equity (Deficit) | | |||||||||||||||||||||
Balance, December 31, 2017 | | | | | — | | | | | $ | 41 | | | | | $ | 33,029,075 | | | | | $ | (30,282,518) | | | | | $ | (511,219) | | | | | $ | — | | | | | $ | 2,235,379 | | |
Preferred stock conversion adjustment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (5,065,534) | | | | | | — | | | | | | — | | | | | | (5,065,534) | | |
Unrealized losses on investments | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,306,795 | | | | | | — | | | | | | (1,306,795) | | |
Balance, December 31, 2018 | | | | | — | | | | | | 41 | | | | | | 33,029,075 | | | | | | (35,348,052) | | | | | | (1,818,014) | | | | | | — | | | | | | (4,136,950) | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (5,733,658) | | | | | | — | | | | | | — | | | | | | (5,733,658) | | |
Xenith note interest waived | | | | | — | | | | | | — | | | | | | 845,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 845,536 | | |
Xenith note conversion | | | | | — | | | | | | 1,855 | | | | | | 19,098,145 | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,100,000 | | |
Class C preferred stock conversion | | | | | — | | | | | | 146 | | | | | | 1,499,854 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Employee stock options | | | | | — | | | | | | — | | | | | | 21,745 | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,745 | | |
Change in equity of noncontrolling interests | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 124,477 | | | | | | 124,477 | | |
Unrealized gains on investments, net of taxes | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,291,413 | | | | | | — | | | | | | 2,291,413 | | |
Unrealized gains on foreign currency, net of taxes | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 146,185 | | | | | | — | | | | | | 146,185 | | |
Balance, December 31, 2019 | | | | | — | | | | | | 2,042 | | | | | | 54,494,355 | | | | | | (41,081,710) | | | | | | 619,584 | | | | | | 124,477 | | | | | | 14,158,748 | | |
Net income | | | | | | | | | | | — | | | | | | — | | | | | | (526,123) | | | | | | — | | | | | | — | | | | | | (526,123) | | |
Capital raise, net of $285,468 related expenses | | | | | — | | | | | | 677 | | | | | | 14,940,856 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,941,533 | | |
Reverse stock split fractions retire | | | | | (175,333) | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | (175,333) | | |
Employee stock options | | | | | — | | | | | | | | | | | | 54,827 | | | | | | | | | | | | | | | | | | | | | | | | 54,827 | | |
Purchase of remaining 49% of 1505 Capital LLC | | | | | — | | | | | | — | | | | | | (375,523) | | | | | | — | | | | | | — | | | | | | (124,477) | | | | | | (500,000) | | |
Unrealized losses on investments | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,875,489) | | | | | | — | | | | | | (2,875,489) | | |
Balance, September 30, 2020 (unaudited) | | | | | (175,333) | | | | | $ | 2,719 | | | | | $ | 69,114,515 | | | | | $ | (41,607,833) | | | | | $ | (2,255,905) | | | | | $ | — | | | | | $ | 25,078,163 | | |
|
| | | Treasury Stock | | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | AOCI* | | | Noncontrolling Interests | | | Total Stockholders’ Equity (Deficit) | | |||||||||||||||||||||
Balance, December 31, 2018 | | | | | — | | | | | $ | 41 | | | | | $ | 33,029,075 | | | | | $ | (35,348,052) | | | | | $ | (1,818,014) | | | | | $ | — | | | | | $ | (4,136,950) | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (3,989,684) | | | | | | — | | | | | | — | | | | | | (3,989,684) | | |
Xenith note interest waived | | | | | — | | | | | | — | | | | | | 845,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 845,536 | | |
Xenith note conversion | | | | | — | | | | | | 1,855 | | | | | | 19,098,145 | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,100,000 | | |
Class C preferred stock conversion | | | | | — | | | | | | 146 | | | | | | 1,499,854 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Change in equity of noncontrolling interests | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 48,661 | | | | | | 48,661 | | |
Unrealized gains on investments | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,214,614 | | | | | | — | | | | | | 2,214,614 | | |
Balance, September 30, 2019 | | | | $ | — | | | | | $ | 2,042 | | | | | $ | 54,472,610 | | | | | $ | (39,337,736) | | | | | $ | 396,600 | | | | | $ | 48,661 | | | | | $ | 15,582,177 | | |
|
| | | Nine months ended September 30, | | | Year ended December 31, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2019 | | | 2018 | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Cash Flows from Operating Activities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | | | | $ | (526,123) | | | | | $ | (3,989,684) | | | | | $ | (5,733,658) | | | | | $ | (5,065,534) | | |
Adjustments to arrive at cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net premium and discount on investments | | | | | (18,425) | | | | | | 80,563 | | | | | | 113,880 | | | | | | 102,285 | | |
Depreciation and amortization | | | | | 44,491 | | | | | | 44,820 | | | | | | 58,761 | | | | | | 147,761 | | |
Stock options | | | | | 29,805 | | | | | | — | | | | | | 21,745 | | | | | | — | | |
Net transfers to noncontrolling interest | | | | | | | | | | | | | | | | | 124,477 | | | | | | | | |
Amortization of deferred acquisition costs | | | | | 376,179 | | | | | | 88,503 | | | | | | — | | | | | | — | | |
Deferred acquisition costs capitalized | | | | | (6,784,482) | | | | | | (2,395,710) | | | | | | — | | | | | | — | | |
Net realized (gains) losses on investments | | | | | (7,829,105) | | | | | | 13,654 | | | | | | (353,602) | | | | | | 334,928 | | |
Deferred coinsurance ceding commission | | | | | 8,161,069 | | | | | | 2,821,255 | | | | | | 3,678,196 | | | | | | 2,944,572 | | |
Notes payable interest accrued | | | | | — | | | | | | 845,536 | | | | | | 845,536 | | | | | | — | | |
Commutation of assumed business | | | | | — | | | | | | — | | | | | | — | | | | | | (2,544,929) | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Reinsurance recoverables | | | | | (7,142,030) | | | | | | (1,002,794) | | | | | | (7,478,880) | | | | | | (707,419) | | |
Interest and dividends due and accrued | | | | | (3,435,736) | | | | | | (554,489) | | | | | | (1,310,492) | | | | | | 22,458 | | |
Premiums receivable | | | | | (654) | | | | | | 733 | | | | | | (9,089) | | | | | | 21,507 | | |
Policy liabilities | | | | | 6,429,321 | | | | | | 76,877,920 | | | | | | 2,963,219 | | | | | | 254,614 | | |
Other assets and liabilities | | | | | 13,537,739 | | | | | | 6,170,613 | | | | | | 4,745,274 | | | | | | 175,344 | | |
Other assets and liabilities – discontinued operations | | | | | 15,217 | | | | | | (117,392) | | | | | | (122,543) | | | | | | (16,055,335) | | |
Net cash provided by or (used in) operating activities | | | | | 2,857,266 | | | | | | 78,883,528 | | | | | | (2,457,176) | | | | | | (20,369,748) | | |
Cash Flows from Investing Activities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities available for sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Purchases | | | | | (158,933,312) | | | | | | (50,253,728) | | | | | | (103,078,444) | | | | | | (8,382,284) | | |
Proceeds from sale or maturity | | | | | 24,050,257 | | | | | | 2,488,387 | | | | | | 5,780,475 | | | | | | 10,243,118 | | |
Mortgage loans on real estate, held for investment purchases | | | | | | | | | | | | | | | | | | | | | | | | | |
Purchases | | | | | (52,502,957) | | | | | | (10,098,478) | | | | | | (15,036,179) | | | | | | — | | |
Proceeds from sale | | | | | 8,918,066 | | | | | | — | | | | | | 1,226,138 | | | | | | — | | |
Purchases of derivatives | | | | | (5,064,964) | | | | | | — | | | | | | (490,831) | | | | | | — | | |
Other invested assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Purchases | | | | | (26,787,844) | | | | | | (2,976,375) | | | | | | (20,533,761) | | | | | | (100,000) | | |
Proceeds from sale | | | | | 13,670,948 | | | | | | — | | | | | | 14,849,555 | | | | | | 104,892 | | |
Preferred stock purchased | | | | | — | | | | | | (500,000) | | | | | | (500,000) | | | | | | — | | |
Notes receivable | | | | | (5,516,302) | | | | | | — | | | | | | — | | | | | | — | | |
Net change in policy loans | | | | | (41,295) | | | | | | 941 | | | | | | (62,171) | | | | | | 9,630 | | |
| | | Nine months ended September 30, | | | Year ended December 31, | | ||||||||||||||||||
| | | 2020 | | | 2019 | | | 2019 | | | 2018 | | ||||||||||||
| | | (unaudited) | | | | | | | | | | | | | | |||||||||
Net purchases of property and equipment | | | | | (44,263) | | | | | | (17,349) | | | | | | (45,634) | | | | | | (12,747) | | |
Net cash (used in) or provided by investing activities | | | | | (202,251,666) | | | | | | (61,356,602) | | | | | | (117,890,852) | | | | | | 1,862,609 | | |
Cash Flows from Financing Activities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Finance lease | | | | | (111) | | | | | | (333) | | | | | | (444) | | | | | | (444) | | |
Proceeds from issuance of preferred stock | | | | | — | | | | | | — | | | | | | — | | | | | | 1,500,000 | | |
Proceeds from issuance of notes payable | | | | | — | | | | | | — | | | | | | — | | | | | | 18,938,705 | | |
Capital contribution | | | | | 14,941,533 | | | | | | — | | | | | | — | | | | | | — | | |
Repurchase of common stock | | | | | (150,311) | | | | | | | | | | | | | | | | | | | | |
1505 Capital LLC purchase | | | | | (500,000) | | | | | | 48,661 | | | | | | — | | | | | | — | | |
Net transfers to noncontrolling interest | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Receipts on deposit-type contracts | | | | | 279,537,157 | | | | | | 4,088,640 | | | | | | 161,392,700 | | | | | | 650 | | |
Withdrawals on deposit-type contracts | | | | | (1,718,288) | | | | | | (126,852) | | | | | | (160,590) | | | | | | (50,732) | | |
Net cash provided by financing activities | | | | | 292,109,980 | | | | | | 4,010,116 | | | | | | 161,231,666 | | | | | | 20,388,179 | | |
Net increase in cash and cash equivalents | | | | | 92,715,580 | | | | | | 21,537,042 | | | | | | 40,883,638 | | | | | | 1,881,040 | | |
Cash and cash equivalents: | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning | | | | | 43,716,205 | | | | | | 2,832,567 | | | | | | 2,832,567 | | | | | | 951,527 | | |
Ending | | | | $ | 136,431,785 | | | | | $ | 24,369,609 | | | | | $ | 43,716,205 | | | | | $ | 2,832,567 | | |
Supplemental Disclosure of Non-Cash Information | | | | | | | | | | | | | | | | | | | | | | | | | |
Settlement of real estate and surplus notes: | | | | | — | | | | | | — | | | | | | — | | | | | | 493,648 | | |
Book value of real estate settled | | | | | — | | | | | | — | | | | | | — | | | | | | (876,400) | | |
Book value of surplus notes (including interest) | | | | | — | | | | | | — | | | | | | — | | | | | | 382,752 | | |
Book value of note payable | | | | | — | | | | | | (19,100,000) | | | | | | (19,100,000) | | | | | | — | | |
Common stock | | | | | — | | | | | | 927,680 | | | | | | 927,680 | | | | | | — | | |
Additional paid in capital | | | | | — | | | | | | 18,172,320 | | | | | | 18,172,320 | | | | | | — | | |
Conversion of preferred stock | | | | | | | | | | | | | | | | | | | | | | | | | |
Book value of preferred stock | | | | | — | | | | | | (1,500,000) | | | | | | (1,500,000) | | | | | | — | | |
Common stock | | | | | — | | | | | | 72,855 | | | | | | 72,855 | | | | | | — | | |
Additional paid in capital | | | | | — | | | | | | 1,427,145 | | | | | | 1,427,145 | | | | | | — | | |
| | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
|
| | | As Converted Voting Common Stock | | |||||||||
| | | Number | | | Percentage | | ||||||
Previous* company shareholders | | | | | 22,873,764 | | | | | | 2.2% | | |
Note conversion ($500,000) | | | | | 24,284,825 | | | | | | 2.4% | | |
Note conversion ($100,000) | | | | | 4,856,965 | | | | | | 0.5% | | |
Note conversion ($1,000,000) | | | | | 48,569,650 | | | | | | 4.7% | | |
| | As Converted Voting Common Stock | | | As Converted Voting Common Stock | | ||||||||||||||||||||
| | Number | | Percentage | | | Number | | Percentage | | ||||||||||||||||
Previous* Company shareholders | | | | 45,746 | | | | | 2.2% | | | |||||||||||||||
Note conversion ($500,000) | | | | 48,570 | | | | | 2.4% | | | |||||||||||||||
Note conversion ($100,000) | | | | 9,714 | | | | | 0.5% | | | |||||||||||||||
Note conversion ($1,000,000) | | | | 97,139 | | | | | 4.7% | | | |||||||||||||||
Note conversion ($17,500,000) | | | | 849,968,875 | | | | | 83.1% | | | | | | 1,699,938 | | | | | 83.1% | | | ||||
Series C Preferred stock conversion | | | | 72,854,474 | | | | | 7.1% | | | | | | 145,709 | | | | | 7.1% | | | ||||
Total shares outstanding as of December 31, 2019 | | | | 1,023,408,553 | | | | | 100.0% | | | | | | 2,046,816 | | | | | 100.0% | | | ||||
|
| | As of June 30, 2020 | | As of December 31, 2019 | | | As of September 30, 2020 | | As of December 31, 2019 | | ||||||||||||||||
Carrying amounts of major classes of assets included as part of discontinued operations: | | | | | | | | | | | | | | | | | | | | | | | ||||
Policy loans | | | $ | 42,129 | | | | $ | 50,387 | | | | | $ | 35,302 | | | | $ | 50,387 | | | ||||
Reinsurance recoverables | | | | 1,077,317 | | | | | 3,569,849 | | | | | | 1,043,985 | | | | | 3,569,849 | | | ||||
Premiums receivable | | | | 22,933 | | | | | 33,512 | | | | | | 23,490 | | | | | 33,512 | | | ||||
Total assets held for sale in the Consolidated Balance Sheet | | | $ | 1,142,379 | | | | $ | 3,653,748 | | | | | $ | 1,102,777 | | | | $ | 3,653,748 | | | ||||
Carrying amounts of major classes of liabilities included as part of discontinued operations: | | | | | | | | | | | | | | | | | | | | | | | ||||
Benefit reserves | | | $ | 594,603 | | | | $ | 1,403,953 | | | |||||||||||||||
Policy claims | | | | 35,302 | | | | | 28,203 | | | |||||||||||||||
Deposit-type contracts | | | | 474,943 | | | | | 2,209,195 | | | |||||||||||||||
Advance premiums | | | | 593 | | | | | 2,226 | | | |||||||||||||||
Accounts payable and accrued expenses | | | | 5,672 | | | | | 3,290 | | | |||||||||||||||
Total liabilities held for sale in the Consolidated Balance Sheets | | | $ | 1,111,113 | | | | $ | 3,646,867 | | |
| | | As of June 30, 2020 | | | As of December 31, 2019 | | ||||||
Benefit reserves | | | | $ | 620,941 | | | | | $ | 1,403,953 | | |
Policy claims | | | | | 24,231 | | | | | | 28,203 | | |
Deposit-type contracts | | | | | 486,486 | | | | | | 2,209,195 | | |
Advance premiums | | | | | 2,273 | | | | | | 2,226 | | |
Accounts payable and accrued expenses | | | | | 7,847 | | | | | | 3,290 | | |
Total liabilities held for sale in the Consolidated Balance Sheets | | | | $ | 1,141,778 | | | | | $ | 3,646,867 | | |
|
| | | As of December 31, 2019 | | | As of December 31, 2018 | | ||||||
Carrying amounts of major classes of assets included as part of discontinued operations: | | | | | | | | | | | | | |
Policy loans | | | | $ | 50,387 | | | | | $ | 366,849 | | |
Reinsurance recoverables | | | | | 3,569,849 | | | | | | 20,359,326 | | |
Premiums receivable | | | | | 33,512 | | | | | | 210,896 | | |
Total assets held for sale in the Consolidated Balance Sheet | | | | $ | 3,653,748 | | | | | $ | 20,937,071 | | |
Carrying amounts of major classes of liabilities included as part of discontinued operations: | | | | | | | | | | | | | |
Benefit reserves | | | | $ | 1,403,953 | | | | | $ | 9,799,834 | | |
Policy claims | | | | | 28,203 | | | | | | 127,666 | | |
Deposit-type contracts | | | | | 2,209,195 | | | | | | 11,050,139 | | |
Advance premiums | | | | | 2,226 | | | | | | 21,699 | | |
Accounts payable and accrued expenses | | | | | 3,290 | | | | | | 53,395 | | |
Total liabilities held for sale in the Consolidated Balance Sheets | | | | $ | 3,646,867 | | | | | $ | 21,052,733 | | |
| | | Year ended December 31, | | |||
| | | 2018 | | |||
Major line items constituting pretax loss of discontinued operations: | | | | | | | |
Premiums | | | | $ | 933,980 | | |
Death and other benefits | | | | | (421,448) | | |
Interest credited | | | | | (192,008) | | |
Increase in benefit reserves | | | | | (41,790) | | |
Amortization of deferred acquisition costs | | | | | (202,913) | | |
Other operating expenses | | | | | (104,105) | | |
Loss on discontinued operations | | | | $ | (28,284) | | |
| | | | Cost or Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value | | | | | Cost or Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value | | ||||||||||||||||||||||||||||||||||
June 30, 2020: | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||
September 30, 2020: | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||
Fixed maturities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
U.S. government obligations | | | | | $ | 1,730,793 | | | | $ | 105,936 | | | | $ | — | | | | $ | 1,836,729 | | | | | | | $ | 2,007,031 | | | | $ | 104,703 | | | | $ | 6,712 | | | | $ | 2,105,022 | | | ||||||||||
Mortgage-backed securities | | | | | | 721,970 | | | | | 6,445 | | | | | 6,646 | | | | | 721,769 | | | | | | | | 371,273 | | | | | 7,042 | | | | | 179 | | | | | 378,136 | | | ||||||||||
Asset-backed securities | | | | | | 174,795,977 | | | | | 1,459,587 | | | | | 8,347,320 | | | | | 167,908,244 | | | | | | | | 205,589,130 | | | | | 2,235,333 | | | | | 5,382,412 | | | | | 202,442,051 | | | ||||||||||
States and political subdivisions – general obligations | | | | | | 238,408 | | | | | 11,671 | | | | | — | | | | | 250,079 | | | | | | | | 237,339 | | | | | 11,409 | | | | | — | | | | | 248,748 | | | ||||||||||
States and political subdivisions – special revenue | | | | | | 2,924,809 | | | | | 540,547 | | | | | — | | | | | 3,465,356 | | | | | | | | 5,629,266 | | | | | 565,843 | | | | | 4,930 | | | | | 6,190,179 | | | ||||||||||
Trust preferred | | | | | | 2,218,142 | | | | | — | | | | | 93,664 | | | | | 2,124,478 | | | | | | | | 2,218,142 | | | | | — | | | | | 55,183 | | | | | 2,162,959 | | | ||||||||||
Corporate | | | | | | 24,320,752 | | | | | 626,580 | | | | | 1,143,700 | | | | | 23,803,632 | | | | | | | | 36,784,304 | | | | | 1,070,998 | | | | | 839,447 | | | | | 37,015,855 | | | ||||||||||
Total fixed maturities | | | | | $ | 206,950,851 | | | | $ | 2,750,766 | | | | $ | 9,591,330 | | | | $ | 200,110,287 | | | | | | | $ | 252,836,485 | | | | $ | 3,995,328 | | | | $ | 6,288,863 | | | | $ | 250,542,950 | | | ||||||||||
Mortgage loans on real estate, held for investment | | | | | | 51,171,943 | | | | | — | | | | | — | | | | | 51,171,943 | | | | | | | | 61,464,515 | | | | | — | | | | | — | | | | | 61,464,515 | | | ||||||||||
Derivatives | | | | | | 3,134,820 | | | | | 588,201 | | | | | 494,919 | | | | | 3,228,102 | | | | | | | | 5,698,117 | | | | | 2,395,084 | | | | | 429,195 | | | | | 7,664,006 | | | ||||||||||
Other invested assets | | | | | | 3,090,964 | | | | | — | | | | | — | | | | | 3,090,964 | | | | | | | | 14,808,870 | | | | | — | | | | | — | | | | | 14,808,870 | | | ||||||||||
Notes receivable | | | | | | 5,488,101 | | | | | — | | | | | — | | | | | 5,488,101 | | | | | | | | 5,516,302 | | | | | — | | | | | — | | | | | 5,516,302 | | | ||||||||||
Policy loans | | | | | | 141,172 | | | | | — | | | | | — | | | | | 141,172 | | | | | | | | 147,309 | | | | | — | | | | | — | | | | | 147,309 | | | ||||||||||
| | | | | $ | 269,977,851 | | | | $ | 3,338,967 | | | | $ | 10,086,249 | | | | $ | 263,230,569 | | | | | | | $ | 340,471,598 | | | | $ | 6,390,412 | | | | $ | 6,718,058 | | | | $ | 340,143,952 | | | ||||||||||
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Fixed maturities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
U.S. government obligations | | | | | | 2,091,710 | | | | | 7,073 | | | | | 17,559 | | | | | 2,081,224 | | | | | | | | 2,091,710 | | | | | 7,073 | | | | | 17,559 | | | | | 2,081,224 | | | ||||||||||
Mortgage-backed securities | | | | | | 819,678 | | | | | — | | | | | 21,070 | | | | | 798,608 | | | | | | | | 819,678 | | | | | — | | | | | 21,070 | | | | | 798,608 | | | ||||||||||
Asset-backed securities | | | | | | 95,006,241 | | | | | 646,335 | | | | | 404,752 | | | | | 95,247,824 | | | | | | | | 95,006,241 | | | | | 646,335 | | | | | 404,752 | | | | | 95,247,824 | | | ||||||||||
States and political subdivisions – general obligations | | | | | | 240,494 | | | | | 8,788 | | | | | — | | | | | 249,282 | | | | | | | | 240,494 | | | | | 8,788 | | | | | — | | | | | 249,282 | | | ||||||||||
States and political subdivisions – special revenue | | | | | | 25,112 | | | | | 179 | | | | | — | | | | | 25,291 | | | | | | | | 25,112 | | | | | 179 | | | | | — | | | | | 25,291 | | | ||||||||||
Corporate | | | | | | 18,493,077 | | | | | 501,022 | | | | | 154,467 | | | | | 18,839,632 | | | | | | | | 18,493,077 | | | | | 501,022 | | | | | 154,467 | | | | | 18,839,632 | | | ||||||||||
Total fixed maturities | | | | | | 116,676,312 | | | | | 1,163,397 | | | | | 597,848 | | | | | 117,241,861 | | | | | | | | 116,676,312 | | | | | 1,163,397 | | | | | 597,848 | | | | | 117,241,861 | | | ||||||||||
Mortgage loans on real estate, held for investment | | | | | | 13,810,041 | | | | | — | | | | | — | | | | | 13,810,041 | | | | | | | | 13,810,041 | | | | | — | | | | | — | | | | | 13,810,041 | | | ||||||||||
Derivatives | | | | | | 490,831 | | | | | 87,684 | | | | | 3,221 | | | | | 575,294 | | | | | | | | 490,831 | | | | | 87,684 | | | | | 3,221 | | | | | 575,294 | | | ||||||||||
Investment escrow | | | | | | 3,899,986 | | | | | — | | | | | — | | | | | 3,899,986 | | | | | | | | 3,899,986 | | | | | — | | | | | — | | | | | 3,899,986 | | | ||||||||||
Other invested assets | | | | | | 2,468,947 | | | | | — | | | | | — | | | | | 2,468,947 | | | | | | | | 2,468,947 | | | | | — | | | | | — | | | | | 2,468,947 | | | ||||||||||
Preferred stock | | | | | | 500,000 | | | | | — | | | | | — | | | | | 500,000 | | | | | | | | 500,000 | | | | | — | | | | | — | | | | | 500,000 | | | ||||||||||
Policy loans | | | | | | 106,014 | | | | | — | | | | | — | | | | | 106,014 | | | | | | | | 106,014 | | | | | — | | | | | — | | | | | 106,014 | | | ||||||||||
Total fixed maturities | | | | | $ | 137,952,131 | | | | $ | 1,251,081 | | | | $ | 601,069 | | | | $ | 138,602,143 | | | | | | | $ | 137,952,131 | | | | $ | 1,251,081 | | | | $ | 601,069 | | | | $ | 138,602,143 | | | ||||||||||
|
| | | Cost or Amortized Cost | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Estimated Fair Value | | ||||||||||||
December 31, 2018: | | | | | | | | | | | | | | | | | | | | | | | | | |
Fixed maturities: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | | | $ | 2,112,816 | | | | | $ | 247 | | | | | $ | 117,112 | | | | | $ | 1,995,951 | | |
Mortgage-back securities | | | | | 1,068,976 | | | | | | — | | | | | | 64,925 | | | | | | 1,004,051 | | |
States and political subdivisions – general obligations | | | | | 265,473 | | | | | | — | | | | | | 2,289 | | | | | | 263,184 | | |
States and political subdivisions – special revenue | | | | | 25,231 | | | | | | — | | | | | | 58 | | | | | | 25,173 | | |
Corporate | | | | | 15,754,345 | | | | | | 14 | | | | | | 1,658,535 | | | | | | 14,095,824 | | |
Total fixed maturities | | | | $ | 19,226,841 | | | | | $ | 261 | | | | | $ | 1,842,919 | | | | | $ | 17,384,183 | | |
| | | Amortized Cost | | | Estimated Fair Value | | | Credit Rating | | ||||||
June 30, 2020: | | | | | | | | | | | | | | | | |
Fixed maturities: | | | | | | | | | | | | | | | | |
States and political subdivisions – general obligations | | | | | | | | | | | | | | | | |
Bellingham, Washington | | | | $ | 107,128 | | | | | $ | 118,028 | | | | AA+ | |
Longview, Washington Refunding | | | | | 131,280 | | | | | | 132,051 | | | | Aa3 | |
Total | | | | $ | 238,408 | | | | | $ | 250,079 | | | | | |
|
| | | Amortized Cost | | | Estimated Fair Value | | | Credit Rating | | ||||||
December 31,2019: | | | | | | | | | | | | | | | | |
Fixed maturities: | | | | | | | | | | | | | | | | |
States and political subdivisions – general obligations | | | | | | | | | | | | | | | | |
Bellingham, Washington | | | | $ | 107,709 | | | | | $ | 115,597 | | | | AA+ | |
Longview, Washington Refunding | | | | | 132,785 | | | | | | 133,685 | | | | Aa3 | |
Total | | | | $ | 240,494 | | | | | $ | 249,282 | | | | | |
| | | Amortized Cost | | | Estimated Fair Value | | | Credit Rating | | ||||||
September 30, 2020: | | | | | | | | | | | | | | | | |
Fixed maturities: | | | | | | | | | | | | | | | | |
States and political subdivisions – general obligations | | | | | | | | | | | | | | | | |
Bellingham, Washington | | | | $ | 106,829 | | | | | $ | 117,759 | | | | AA+ | |
Longview, Washington Refunding | | | | | 130,510 | | | | | | 130,989 | | | | Aa3 | |
Total | | | | $ | 237,339 | | | | | $ | 248,748 | | | | | |
|
| | | Amortized Cost | | | Estimated Fair Value | | | Credit Rating | | ||||||
December 31,2019: | | | | | | | | | | | | | | | | |
Fixed maturities: | | | | | | | | | | | | | | | | |
States and political subdivisions – general obligations | | | | | | | | | | | | | | | | |
Bellingham, Washington | | | | $ | 107,709 | | | | | $ | 115,597 | | | | AA+ | |
Longview, Washington Refunding | | | | | 132,785 | | | | | | 133,685 | | | | Aa3 | |
Total | | | | $ | 240,494 | | | | | $ | 249,282 | | | | | |
|
| | | June 30, 2020 | | | December 31, 2019 | | ||||||||||||||||||||||||||||||
| | | Estimated Fair Value | | | Gross Unrealized Loss | | | Number of Securities(1) | | | Estimated Fair Value | | | Gross Unrealized Loss | | | Number of Securities(1) | | ||||||||||||||||||
Fixed Maturities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Less than 12 months: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | | | $ | — | | | | | $ | — | | | | | | — | | | | | $ | 1,518,772 | | | | | $ | 14,935 | | | | | | 9 | | |
Asset-backed securities | | | | | 115,541,627 | | | | | | 7,989,266 | | | | | | 66 | | | | | | 39,114,732 | | | | | | 404,752 | | | | | | 26 | | |
| | June 30, 2020 | | December 31, 2019 | | | September 30, 2020 | | December 31, 2019 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Estimated Fair Value | | Gross Unrealized Loss | | Number of Securities(1) | | Estimated Fair Value | | Gross Unrealized Loss | | Number of Securities(1) | | | Estimated Fair Value | | Gross Unrealized Loss | | Number of Securities(1) | | Estimated Fair Value | | Gross Unrealized Loss | | Number of Securities(1) | | ||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Maturities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
Less than 12 months: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
U.S. government obligations | | | $ | 35,073 | | | | $ | 311 | | | | | 1 | | | | $ | 1,518,772 | | | | $ | 14,935 | | | | | 9 | | | |||||||||||||||||||||||||||||||||||||||||||
Asset-backed securities | | | | 112,190,271 | | | | | 5,122,847 | | | | | 66 | | | | | 39,114,732 | | | | | 404,752 | | | | | 26 | | | |||||||||||||||||||||||||||||||||||||||||||
Mortgage-back securities | | | | 72,535 | | | | | 392 | | | | | 3 | | | | | 160,010 | | | | | 4,844 | | | | | 4 | | | | | | 22,828 | | | | | 179 | | | | | 1 | | | | | 160,010 | | | | | 4,844 | | | | | 4 | | | ||||||||||||
States and political subdivisions – special revenue | | | | 1,168,610 | | | | | 4,930 | | | | | 3 | | | | | — | | | | | — | | | | | — | | | |||||||||||||||||||||||||||||||||||||||||||
Trust preferred | | | | 2,124,478 | | | | | 93,664 | | | | | 1 | | | | | — | | | | | — | | | | | — | | | | | | 2,162,960 | | | | | 55,183 | | | | | 1 | | | | | — | | | | | — | | | | | — | | | ||||||||||||
Corporate | | | | 9,025,918 | | | | | 892,092 | | | | | 11 | | | | | 2,800,815 | | | | | 13,618 | | | | | 4 | | | | | | 19,005,716 | | | | | 666,972 | | | | | 24 | | | | | 2,800,815 | | | | | 13,618 | | | | | 4 | | | ||||||||||||
Greater than 12 months: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||
U.S. government obligations | | | | — | | | | | — | | | | | — | | | | | 353,834 | | | | | 2,624 | | | | | 2 | | | | | | 157,752 | | | | | 6,401 | | | | | 4 | | | | | 353,834 | | | | | 2,624 | | | | | 2 | | | ||||||||||||
Asset-backed securities | | | | 12,329,718 | | | | | 358,054 | | | | | 6 | | | | | — | | | | | — | | | | | — | | | | | | 10,592,569 | | | | | 259,565 | | | | | 5 | | | | | — | | | | | — | | | | | — | | | ||||||||||||
Mortgage-back securities | | | | 234,404 | | | | | 6,254 | | | | | 5 | | | | | 638,598 | | | | | 16,226 | | | | | 14 | | | | | | — | | | | | — | | | | | — | | | | | 638,598 | | | | | 16,226 | | | | | 14 | | | ||||||||||||
Corporate | | | | 645,564 | | | | | 251,608 | | | | | 4 | | | | | 2,201,658 | | | | | 140,849 | | | | | 13 | | | | | | 584,003 | | | | | 172,475 | | | | | 4 | | | | | 2,201,658 | | | | | 140,849 | | | | | 13 | | | ||||||||||||
Total fixed maturities | | | $ | 139,974,244 | | | | $ | 9,591,330 | | | | | 96 | | | | $ | 46,788,419 | | | | $ | 597,848 | | | | | 72 | | | | | $ | 145,919,782 | | | | $ | 6,288,863 | | | | | 109 | | | | $ | 46,788,419 | | | | $ | 597,848 | | | | | 72 | | | ||||||||||||
|
| | Amortized Cost | | Estimated Fair Value | | | Amortized Cost | | Estimated Fair Value | | ||||||||||||||||
Due in one year or less | | | $ | 201,929 | | | | $ | 202,962 | | | | | $ | 964,295 | | | | $ | 1,067,733 | | | ||||
Due after one year through five years | | | | 10,172,450 | | | | | 10,355,681 | | | | | | 21,154,753 | | | | | 21,469,752 | | | ||||
Due after five years through ten years | | | | 52,847,487 | | | | | 52,184,902 | | | | | | 76,161,161 | | | | | 76,055,560 | | | ||||
Due after ten years through twenty years | | | | 129,141,495 | | | | | 122,598,167 | | | | | | 134,902,342 | | | | | 131,788,843 | | | ||||
Due after twenty years | | | | 14,587,490 | | | | | 14,768,575 | | | | | | 19,653,934 | | | | | 20,161,062 | | | ||||
| | | $ | 206,950,851 | | | | $ | 200,110,287 | | | | | $ | 252,836,485 | | | | $ | 250,542,950 | | |
| | | December 31, 2019 | | | December 31, 2018 | | ||||||||||||||||||||||||||||||
| | | Estimated Fair Value | | | Gross Unrealized Loss | | | Number of Securities(1) | | | Estimated Fair Value | | | Gross Unrealized Loss | | | Number of Securities(1) | | ||||||||||||||||||
Fixed Maturities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Less than 12 months: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | | | $ | 1,518,772 | | | | | $ | 14,935 | | | | | | 9 | | | | | $ | 7,862 | | | | | $ | 430 | | | | ��� | | 1 | | |
Asset-backed securities | | | | | 39,114,732 | | | | | | 404,752 | | | | | | 26 | | | | | | — | | | | | | — | | | | | | — | | |
Mortgage-back securities | | | | | 160,010 | | | | | | 4,844 | | | | | | 4 | | | | | | — | | | | | | — | | | | | | — | | |
Corporate | | | | | 2,800,815 | | | | | | 13,618 | | | | | | 4 | | | | | | 3,351,664 | | | | | | 315,617 | | | | | | 23 | | |
Greater than 12 months: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | | | | 353,834 | | | | | | 2,624 | | | | | | 2 | | | | | | 1,785,949 | | | | | | 116,682 | | | | | | 10 | | |
Mortgage-back securities | | | | | 638,598 | | | | | | 16,226 | | | | | | 14 | | | | | | 1,004,052 | | | | | | 64,925 | | | | | | 19 | | |
States and political subdivisions – general obligations | | | | | — | | | | | | — | | | | | | — | | | | | | 263,183 | | | | | | 2,289 | | | | | | 2 | | |
States and political subdivisions – special revenue | | | | | — | | | | | | — | | | | | | — | | | | | | 25,173 | | | | | | 58 | | | | | | 1 | | |
Corporate | | | | | 2,201,658 | | | | | | 140,849 | | | | | | 13 | | | | | | 10,628,745 | | | | | | 1,342,918 | | | | | | 58 | | |
Total fixed maturities | | | | $ | 46,788,419 | | | | | $ | 597,848 | | | | | | 72 | | | | | $ | 17,066,628 | | | | | $ | 1,842,919 | | | | | | 114 | | |
| | | Amortized Cost | | | Estimated Fair Value | | ||||||
Due in one year or less | | | | $ | 101,205 | | | | | $ | 100,958 | | |
Due after one year through five years | | | | | 2,649,457 | | | | | | 2,724,011 | | |
Due after five years through ten years | | | | | 21,925,465 | | | | | | 22,013,673 | | |
Due after ten years through twenty years | | | | | 84,210,270 | | | | | | 84,473,538 | | |
Due after twenty years | | | | | 7,789,915 | | | | | | 7,929,681 | | |
| | | | $ | 116,676,312 | | | | | $ | 117,241,861 | | |
| | Carrying Value | | Interest Income Accrued | | Interest Income Earned | | | Carrying Value | | Interest Income Accrued | | Interest Income Earned | | ||||||||||||||||||||||||
June 30, 2020: | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
September 30, 2020: | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
Industrial | | | $ | 500,000 | | | | $ | 2,871 | | | | $ | 16,340 | | | | | $ | 1,250,000 | | | | $ | 18,236 | | | | $ | 62,743 | | | ||||||
Commercial mortgage loan – multi-family | | | | 48,612,870 | | | | | 890,188 | | | | | 1,570,056 | | | | | | 58,195,692 | | | | | 1,634,008 | | | | | 2,199,823 | | | ||||||
Other | | | | 2,059,073 | | | | | 205,297 | | | | | 98,721 | | | | | | 2,018,823 | | | | | 221,136 | | | | | 134,631 | | | ||||||
Total mortgage loans | | | $ | 51,171,943 | | | | $ | 1,098,356 | | | | $ | 1,685,117 | | | | | $ | 61,464,515 | | | | $ | 1,873,380 | | | | $ | 2,397,197 | | | ||||||
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Industrial | | | $ | 500,000 | | | | $ | — | | | | $ | 15,889 | | | | | $ | 500,000 | | | | $ | — | | | | $ | 15,889 | | | ||||||
Commercial mortgage loan – multi-family | | | | 11,320,924 | | | | | 116,860 | | | | | 329,684 | | | | | | 11,320,924 | | | | | 116,860 | | | | | 329,684 | | | ||||||
Other | | | | 1,989,117 | | | | | 195,168 | | | | | 7,386 | | | | | | 1,989,117 | | | | | 195,168 | | | | | 7,386 | | | ||||||
Total mortgage loans | | | $ | 13,810,041 | | | | $ | 312,028 | | | | $ | 352,959 | | | | | $ | 13,810,041 | | | | $ | 312,028 | | | | $ | 352,959 | | |
| | Six months ended June 30, | | | Nine months ended September 30, | | ||||||||||||||||||||
| | 2020 | | 2019 | | | 2020 | | 2019 | | ||||||||||||||||
Fixed maturities | | | $ | 1,041,929 | | | | $ | 631,118 | | | | | $ | 1,364,414 | | | | $ | 342,104 | | | ||||
Mortgage loans | | | | — | | | | | 9,656 | | | | | | 80,749 | | | | | 78,466 | | | ||||
Other | | | | — | | | | | 8,076 | | | | | | 62,942 | | | | | 6,973 | | | ||||
Gross investment income | | | | 1,041,929 | | | | | 648,850 | | | | | | 1,508,105 | | | | | 427,543 | | | ||||
Less: refund received on investment expenses (investment expense) | | | | (198,793) | | | | | (9,840) | | | |||||||||||||||
Less: investment expense | | | | (230,768) | | | | | (96,633) | | | |||||||||||||||
Investment income, net of expenses | | | $ | 843,136 | | | | $ | 639,010 | | | | | $ | 1,277,337 | | | | $ | 330,910 | | | ||||
| |
| | | Year Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Fixed maturities | | | | $ | 292,453 | | | | | $ | 789,949 | | |
Other | | | | | 38,397 | | | | | | 44,614 | | |
Gross investment income | | | | | 330,850 | | | | | | 834,563 | | |
Less investment expenses | | | | | (210,269) | | | | | | (318,675) | | |
Investment (loss) income, net of expenses | | | | $ | 120,581 | | | | | $ | 515,888 | | |
| | | | June 30, 2020 | | December 31, 2019 | | | | | September 30, 2020 | | December 31, 2019 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives Not Designated as Hedging Instruments | | Location in the Consolidated Statement of Balance Sheets | | Notional Amount | | Number of Contracts | | Estimated Fair Value | | Notional Amount | | Number of Contracts | | Estimated Fair Value | | | Location in the Consolidated Statement of Balance Sheets | | Notional Amount | | Number of Contracts | | Estimated Fair Value | | Notional Amount | | Number of Contracts | | Estimated Fair Value | | ||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-indexed options | | Derivatives | | | $ | 86,093,121 | | | | | 108 | | | | $ | 3,228,102 | | | | $ | 9,698,863 | | | | | 24 | | | | $ | 575,294 | | | | Derivatives | | | $ | 166,197,790 | | | | | 177 | | | | $ | 7,664,006 | | | | $ | 9,698,863 | | | | | 24 | | | | $ | 575,294 | | | ||||||||||||||
Equity-indexed embedded derivative | | Deposit-type contracts | | | | 107,296,291 | | | | | 724 | | | | | 3,038,675 | | | | | 10,720,324 | | | | | 108 | | | | | 576,634 | | | | Deposit-type contracts | | | | 204,289,800 | | | | | 1,418 | | | | | 6,359,657 | | | | | 10,720,324 | | | | | 108 | | | | | 576,634 | | |
| | June 30, 2020 | | | September 30, 2020 | | ||||||||||||||||||||||||||||||||
Reinsurance Portfolio | | Book Value of Assets | | Market Value of Assets | | Total Return Swap Value | | | Book Value of Assets | | Market Value of Assets | | Total Return Swap Value | | ||||||||||||||||||||||||
Ironbound | | | $ | 99,749,714 | | | | $ | 93,088,880 | | | | $ | 6,660,834 | | | | | $ | 100,442,130 | | | | $ | 96,516,241 | | | | $ | 3,925,889 | | | ||||||
SDA | | | | 21,116,007 | | | | | 20,006,611 | | | | | 1,109,396 | | | | | | 21,072,864 | | | | | 20,495,383 | | | | | 577,481 | | | ||||||
US Alliance | | | | 31,973,893 | | | | | 31,272,086 | | | | | 701,807 | | | | | | 36,801,442 | | | | | 36,616,705 | | | | | 184,737 | | | ||||||
SRC2 | | | | 23,624,061 | | | | | 23,942,606 | | | | | (318,545) | | | ||||||||||||||||||||||
Total | | | $ | 152,839,614 | | | | $ | 144,367,577 | | | | $ | 8,472,037 | | | | | $ | 181,940,497 | | | | $ | 177,570,935 | | | | $ | 4,369,562 | | |
| | Quoted In Active Markets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Estimated Fair Value | | | Quoted In Active Markets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Estimated Fair Value | | ||||||||||||||||||||||||||||||||
June 30, 2020 | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||
September 30, 2020 | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||
Financial assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Fixed maturities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
U.S. government obligations | | | $ | — | | | | $ | 1,836,729 | | | | $ | — | | | | $ | 1,836,729 | | | | | $ | — | | | | $ | 2,105,022 | | | | $ | — | | | | $ | 2,105,022 | | | ||||||||
Mortgage-backed securities | | | | — | | | | | 721,769 | | | | | — | | | | | 721,769 | | | | | | — | | | | | 378,136 | | | | | — | | | | | 378,136 | | | ||||||||
Asset-backed securities | | | | — | | | | | 167,908,244 | | | | | — | | | | | 167,908,244 | | | | | | — | | | | | 202,442,051 | | | | | — | | | | | 202,442,051 | | | ||||||||
States and political subdivisions – general obligations | | | | — | | | | | 250,079 | | | | | — | | | | | 250,079 | | | | | | — | | | | | 248,748 | | | | | — | | | | | 248,748 | | | ||||||||
States and political subdivisions – special revenue | | | | — | | | | | 3,465,356 | | | | | — | | | | | 3,465,356 | | | | | | — | | | | | 6,190,179 | | | | | — | | | | | 6,190,179 | | | ||||||||
Trust preferred | | | | — | | | | | 2,124,478 | | | | | — | | | | | 2,124,478 | | | | | | — | | | | | 2,162,959 | | | | | — | | | | | 2,162,959 | | | ||||||||
Corporate | | | | — | | | | | 23,803,632 | | | | | — | | | | | 23,803,632 | | | | | | — | | | | | 37,015,855 | | | | | — | | | | | 37,015,855 | | | ||||||||
Total fixed maturities | | | | — | | | | | 200,110,287 | | | | | — | | | | | 200,110,287 | | | | | | — | | | | | 250,542,950 | | | | | — | | | | | 250,542,950 | | | ||||||||
Mortgage loans on real estate, held for investment | | | | — | | | | | — | | | | | 51,171,943 | | | | | 51,171,943 | | | | | | — | | | | | — | | | | | 61,464,515 | | | | | 61,464,515 | | | ||||||||
Derivatives | | | | — | | | | | 3,228,102 | | | | | — | | | | | 3,228,102 | | | | | | — | | | | | 7,664,006 | | | | | — | | | | | 7,664,006 | | | ||||||||
Other invested assets | | | | — | | | | | — | | | | | 3,090,964 | | | | | 3,090,964 | | | | | | — | | | | | — | | | | | 14,808,870 | | | | | 14,808,870 | | | ||||||||
Notes receivable | | | | — | | | | | 5,488,101 | | | | | — | | | | | 5,488,101 | | | | | | — | | | | | 5,516,302 | | | | | — | | | | | 5,516,302 | | | ||||||||
Policy loans | | | | — | | | | | — | | | | | 141,172 | | | | | 141,172 | | | | | | — | | | | | — | | | | | 147,309 | | | | | 147,309 | | | ||||||||
Total Investments | | | $ | — | | | | $ | 208,826,490 | | | | $ | 54,404,079 | | | | $ | 263,230,569 | | | | | $ | — | | | | $ | 263,723,258 | | | | $ | 76,420,694 | | | | $ | 340,143,952 | | | ||||||||
Financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Embedded derivative for equity-indexed contracts | | | $ | — | | | | $ | 3,038,675 | | | | $ | — | | | | | 3,038,675 | | | | | $ | — | | | | $ | 6,359,657 | | | | $ | — | | | | | 6,359,657 | | | ||||||||
December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Fixed maturities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
U.S. government obligations | | | | — | | | | | 2,081,224 | | | | | — | | | | | 2,081,224 | | | | | | — | | | | | 2,081,224 | | | | | — | | | | | 2,081,224 | | | ||||||||
Mortgage-backed securities | | | | — | | | | | 798,608 | | | | | — | | | | | 798,608 | | | | | | — | | | | | 798,608 | | | | | — | | | | | 798,608 | | | ||||||||
Asset-backed securities | | | | — | | | | | 95,247,824 | | | | | — | | | | | 95,247,824 | | | | | | — | | | | | 95,247,824 | | | | | — | | | | | 95,247,824 | | | ||||||||
States and political subdivisions – general obligations | | | | — | | | | | 249,282 | | | | | — | | | | | 249,282 | | | | | | — | | | | | 249,282 | | | | | — | | | | | 249,282 | | | ||||||||
States and political subdivisions – special revenue | | | | — | | | | | 25,291 | | | | | — | | | | | 25,291 | | | | | | — | | | | | 25,291 | | | | | — | | | | | 25,291 | | | ||||||||
Corporate | | | | — | | | | | 18,839,632 | | | | | — | | | | | 18,839,632 | | | | | | — | | | | | 18,839,632 | | | | | — | | | | | 18,839,632 | | | ||||||||
Total fixed maturities | | | | — | | | | | 117,241,861 | | | | | — | | | | | 117,241,861 | | | | | | — | | | | | 117,241,861 | | | | | — | | | | | 117,241,861 | | | ||||||||
Mortgage loans on real estate, held for investment | | | | — | | | | | — | | | | | 13,810,041 | | | | | 13,810,041 | | | | | | — | | | | | — | | | | | 13,810,041 | | | | | 13,810,041 | | | ||||||||
Derivatives | | | | — | | | | | 575,294 | | | | | — | | | | | 575,294 | | | | | | — | | | | | 575,294 | | | | | — | | | | | 575,294 | | | ||||||||
Investment escrow | | | | — | | | | | 3,899,986 | | | | | — | | | | | 3,899,986 | | | | | | — | | | | | 3,899,986 | | | | | — | | | | | 3,899,986 | | | ||||||||
Other invested assets | | | | — | | | | | — | | | | | 2,468,947 | | | | | 2,468,947 | | | | | | — | | | | | — | | | | | 2,468,947 | | | | | 2,468,947 | | | ||||||||
Preferred stock | | | | — | | | | | — | | | | | 500,000 | | | | | 500,000 | | | | | | — | | | | | — | | | | | 500,000 | | | | | 500,000 | | | ||||||||
Policy loans | | | | — | | | | | — | | | | | 106,014 | | | | | | | | | | | — | | | | | — | | | | | 106,014 | | | | | | | | ||||||||
Total Investments | | | $ | — | | | | $ | 121,717,141 | | | | $ | 16,885,002 | | | | $ | 138,496,129 | | | | | $ | — | | | | $ | 121,717,141 | | | | $ | 16,885,002 | | | | $ | 138,496,129 | | | ||||||||
Financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Embedded derivative for equity-indexed contracts | | | $ | — | | | | $ | 576,634 | | | | $ | — | | | | | 576,634 | | | | | $ | — | | | | $ | 576,634 | | | | $ | — | | | | | 576,634 | | |
| | | Quoted In Active Markets (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | | | Estimated Fair Value | | ||||||||||||
December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Fixed maturities: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | | | $ | — | | | | | $ | 2,081,224 | | | | | $ | — | | | | | $ | 2,081,224 | | |
Mortgage-backed securities | | | | | — | | | | | | 798,608 | | | | | | — | | | | | | 798,608 | | |
Asset-backed securities | | | | | — | | | | | | 95,247,824 | | | | | | — | | | | | | 95,247,824 | | |
States and political subdivisions – general obligations | | | | | — | | | | | | 249,282 | | | | | | — | | | | | | 249,282 | | |
States and political subdivisions – special revenue | | | | | — | | | | | | 25,291 | | | | | | — | | | | | | 25,291 | | |
Corporate | | | | | — | | | | | | 18,839,632 | | | | | | — | | | | | | 18,839,632 | | |
Total fixed maturities | | | | | — | | | | | | 117,241,861 | | | | | | — | | | | | | 117,241,861 | | |
Mortgage loans on real estate, held for investment | | | | | — | | | | | | — | | | | | | 13,810,041 | | | | | | 13,810,041 | | |
Derivatives | | | | | — | | | | | | 575,294 | | | | | | — | | | | | | 575,294 | | |
Investment escrow | | | | | — | | | | | | 3,899,986 | | | | | | — | | | | | | 3,899,986 | | |
Other invested assets | | | | | — | | | | | | — | | | | | | 2,468,947 | | | | | | 2,468,947 | | |
Preferred stock | | | | | — | | | | | | — | | | | | | 500,000 | | | | | | 500,000 | | |
Total Investments | | | | $ | — | | | | | $ | 121,717,141 | | | | | $ | 16,778,988 | | | | | $ | 138,496,129 | | |
Financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Embedded derivative for equity-indexed contracts | | | | $ | — | | | | | $ | 576,634 | | | | | $ | — | | | | | | 576,634 | | |
December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Fixed maturities: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | | | $ | — | | | | | $ | 1,995,951 | | | | | $ | — | | | | | $ | 1,995,951 | | |
Mortgage-back securities | | | | | — | | | | | | 1,004,051 | | | | | | — | | | | | | 1,004,051 | | |
States and political subdivisions – general obligations | | | | | — | | | | | | 263,184 | | | | | | — | | | | | | 263,184 | | |
States and political subdivisions – special revenue | | | | | — | | | | | | 25,173 | | | | | | — | | | | | | 25,173 | | |
Corporate | | | | | — | | | | | | 14,095,824 | | | | | | — | | | | | | 14,095,824 | | |
Total fixed maturities | | | | $ | — | | | | | $ | 17,384,183 | | | | | $ | — | | | | | $ | 17,384,183 | | |
| | June 30, 2020 | | | September 30, 2020 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | Fair Value Measurements Using | | | | | | | | Fair Value Measurements Using | | ||||||||||||||||||||||||||||||||||||||||||||||
| | Carrying Amount | | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Fair Value | | | Carrying Amount | | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Fair Value | | ||||||||||||||||||||||||||||||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Policy loans | | | $ | 141,172 | | | | $ | — | | | | $ | — | | | | $ | 141,172 | | | | $ | 141,172 | | | | | $ | 147,309 | | | | $ | — | | | | $ | — | | | | $ | 147,309 | | | | $ | 147,309 | | | ||||||||||
Cash | | | | 75,041,902 | | | | | 75,041,902 | | | | | — | | | | | — | | | | | 75,041,902 | | | | | | 136,431,785 | | | | | 136,431,785 | | | | | — | | | | | — | | | | | 136,431,785 | | | ||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||
Policyholder deposits (Deposit-type contracts) | | | | 321,830,976 | | | | | — | | | | | — | | | | | 321,830,976 | | | | | 321,830,976 | | | | | | 455,429,384 | | | | | — | | | | | — | | | | | 455,429,384 | | | | | 455,429,384 | | |
| | | December 31, 2019 | | |||||||||||||||||||||||||||
| | | | | | | | | Fair Value Measurements Using | | |||||||||||||||||||||
| | | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | | | Fair Value | | |||||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policy loans | | | | $ | 106,014 | | | | | $ | — | | | | | $ | — | | | | | $ | 106,014 | | | | | $ | 106,014 | | |
Cash | | | | | 43,716,205 | | | | | | 43,716,205 | | | | | | — | | | | | | — | | | | | | 43,716,205 | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policyholder deposits (Deposit-type contracts) | | | | | 171,168,785 | | | | | | — | | | | | | — | | | | | | 171,168,785 | | | | | | 171,168,785 | | |
| | Beginning Balance As of December 31, 2019 | | Additions | | Sales | | Valuation Allowance | | Ending Balance As of June 30, 2020 | | | Beginning Balance As of December 31, 2019 | | Additions | | Sales | | Valuation Allowance | | Realized Gain | | Ending Balance As of September 30, 2020 | | ||||||||||||||||||||||||||||||||||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||
Policy loans | | | $ | 106,014 | | | | $ | 35,158 | | | | $ | — | | | | $ | — | | | | $ | 141,172 | | | | | $ | 106,014 | | | | $ | 41,295 | | | | $ | — | | | | $ | — | | | | $ | — | | | | $ | 147,309 | | | |||||||||||
Mortgage loans on real estate, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
held for investment | | | | 13,810,041 | | | | | 39,431,852 | | | | | 2,069,950 | | | | | — | | | | | 51,171,943 | | | | | | 13,810,041 | | | | | 56,402,943 | | | | | 8,918,066 | | | | | — | | | | | 169,597 | | | | | 61,464,515 | | | |||||||||||
Other invested assets | | | | 2,468,947 | | | | | 7,011,102 | | | | | 5,612,112 | | | | | (776,973) | | | | | 3,090,964 | | | | | | 2,468,947 | | | | | 26,787,844 | | | | | 13,670,948 | | | | | (776,973) | | | | | — | | | | | 14,808,870 | | | |||||||||||
Preferred stock | | | | 500,000 | | | | | — | | | | | — | | | | | (500,000) | | | | | — | | | | | | 500,000 | | | | | — | | | | | — | | | | | (500,000) | | | | | — | | | | | — | | | |||||||||||
Total Investments | | | $ | 16,885,002 | | | | $ | 46,478,112 | | | | $ | 7,682,062 | | | | $ | (1,276,973) | | | | $ | 54,404,079 | | | | | $ | 16,885,002 | | | | $ | 83,232,082 | | | | $ | 22,589,014 | | | | $ | (1,276,973) | | | | $ | 169,597 | | | | $ | 76,420,694 | | |
| | | December 31, 2019 | | |||||||||||||||||||||||||||
| | | | | | | | | Fair Value Measurements Using | | |||||||||||||||||||||
| | | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | | | Fair Value | | |||||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policy loans | | | | $ | 106,014 | | | | | $ | — | | | | | $ | — | | | | | $ | 106,014 | | | | | $ | 106,014 | | |
Cash | | | | | 43,716,205 | | | | | | 43,716,205 | | | | | | — | | | | | | — | | | | | | 43,716,205 | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policyholder deposits (Deposit-type contracts) | | | | | 171,168,785 | | | | | | — | | | | | | — | | | | | | 171,168,785 | | | | | | 171,168,785 | | |
| | | December 31, 2018 | | |||||||||||||||||||||||||||
| | | | | | | | | Fair Value Measurements Using | | |||||||||||||||||||||
| | | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | | | Fair Value | | |||||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policy loans | | | | $ | 43,843 | | | | | $ | — | | | | | $ | — | | | | | $ | 43,843 | | | | | $ | 43,843 | | |
Cash | | | | | 2,832,567 | | | | | | 2,832,567 | | | | | | — | | | | | | — | | | | | | 2,832,567 | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policyholder deposits (Deposit-type contracts) | | | | | 7,234,927 | | | | | | — | | | | | | — | | | | | | 7,234,927 | | | | | | 7,234,927 | | |
Notes payable | | | | | 18,938,705 | | | | | | — | | | | | | — | | | | | | 18,938,705 | | | | | | 18,938,705 | | |
| | | December 31, 2019 | | |||||||||||||||||||||||||||
| | | | | | | | | Fair Value Measurements Using | | |||||||||||||||||||||
| | | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | | | Fair Value | | |||||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policy loans | | | | $ | 106,014 | | | | | $ | — | | | | | $ | — | | | | | $ | 106,014 | | | | | $ | 106,014 | | |
Cash | | | | | 43,716,205 | | | | | | 43,716,205 | | | | | | — | | | | | | — | | | | | | 43,716,205 | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policyholder deposits (Deposit-type contracts) | | | | | 171,168,785 | | | | | | — | | | | | | — | | | | | | 171,168,785 | | | | | | 171,168,785 | | |
| | | December 31, 2018 | | |||||||||||||||||||||||||||
| | | | | | | | | Fair Value Measurements Using | | |||||||||||||||||||||
| | | Carrying Amount | | | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | | | Fair Value | | |||||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policy loans | | | | $ | 43,843 | | | | | $ | — | | | | | $ | — | | | | | $ | 43,843 | | | | | $ | 43,843 | | |
Cash | | | | | 2,832,567 | | | | | | 2,832,567 | | | | | | — | | | | | | — | | | | | | 2,832,567 | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policyholder deposits (Deposit-type contracts) | | | | | 7,234,927 | | | | | | — | | | | | | — | | | | | | 7,234,927 | | | | | | 7,234,927 | | |
Notes payable | | | | | 18,938,705 | | | | | | — | | | | | | — | | | | | | 18,938,705 | | | | | | 18,938,705 | | |
| | | Beginning Balance As of December 31, 2018 | | | Additions | | | Sales | | | Total gains Included in Income | | | Ending Balance As of December 31, 2019 | | |||||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Policy loans | | | | $ | 43,843 | | | | | $ | 62,171 | | | | | $ | — | | | | | $ | — | | | | | $ | 106,014 | | |
Mortgage loans on real estate, held for investment | | | | | — | | | | | | 15,036,179 | | | | | | 1,226,138 | | | | | | — | | | | | | 13,810,041 | | |
Other invested assets | | | | | — | | | | | | 17,287,325 | | | | | | 14,849,555 | | | | | | 31,177 | | | | | | 2,468,947 | | |
Preferred stock | | | | | — | | | | | | 500,000 | | | | | | — | | | | | | — | | | | | | 500,000 | | |
Total Investments | | | | $ | 43,843 | | | | | $ | 32,885,675 | | | | | $ | 16,075,693 | | | | | $ | 31,177 | | | | | $ | 16,885,002 | | |
| | | June 30, 2020 | | | December 31, 2019 | | | December 31, 2018 | | |||||||||
Deferred tax assets: | | | | | | | | | | | | | | | | | | | |
Loss carryforwards | | | | $ | 781,003 | | | | | $ | 436,777 | | | | | | 1,429,458 | | |
Capitalized costs | | | | | 195,763 | | | | | | 221,918 | | | | | | 269,472 | | |
| | June 30, 2020 | | December 31, 2019 | | December 31, 2018 | | | September 30, 2020 | | December 31, 2019 | | December 31, 2018 | | ||||||||||||||||||||||||
Deferred tax assets: | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
Loss carryforwards | | | $ | 623,258 | | | | $ | 436,777 | | | | | 1,429,458 | | | ||||||||||||||||||||||
Capitalized costs | | | | 186,253 | | | | | 221,918 | | | | | 269,472 | | | ||||||||||||||||||||||
Stock option granted | | | | 9,821 | | | | | 4,566 | | | | | — | | | | | | 4,566 | | | | | 4,566 | | | | | — | | | ||||||
Unrealized losses on investments | | | | 1,679,207 | | | | | — | | | | | 390,349 | | | | | | 475,720 | | | | | — | | | | | 390,349 | | | ||||||
Policy acquisition costs | | | | 3,686,674 | | | | | 1,468,030 | | | | | — | | | | | | 750,034 | | | | | 1,468,030 | | | | | — | | | ||||||
Charitable contribution carryforward | | | | 1,230 | | | | | 1,020 | | | | | — | | | | | | 1,020 | | | | | 1,020 | | | | | — | | | ||||||
Property and equipment | | | | 23,056 | | | | | 15,508 | | | | | — | | | | | | 29,896 | | | | | 15,508 | | | | | — | | | ||||||
Benefit reserves | | | | 435,780 | | | | | 848,643 | | | | | 192,858 | | | | | | 3,263,165 | | | | | 848,643 | | | | | 192,858 | | | ||||||
Total deferred tax assets | | | | 6,812,534 | | | | | 2,996,462 | | | | | 2,282,137 | | | | | | 5,333,912 | | | | | 2,996,462 | | | | | 2,282,137 | | | ||||||
Less valuation allowance | | | | (4,789,646) | | | | | (2,618,741) | | | | | (1,928,454) | | | | | | (4,631,718) | | | | | (2,618,741) | | | | | (1,928,454) | | | ||||||
Total deferred tax assets, net of valuation allowance | | | | 2,022,888 | | | | | 377,721 | | | | | 353,683 | | | | | | 702,194 | | | | | 377,721 | | | | | 353,683 | | | ||||||
Deferred tax liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Unrealized losses on investments | | | | 1,759,153 | | | | | 116,088 | | | | | — | | | | | | 314,738 | | | | | 116,088 | | | | | — | | | ||||||
Due premiums | | | | 78,242 | | | | | 81,789 | | | | | 117,144 | | | | | | 81,789 | | | | | 81,789 | | | | | 117,144 | | | ||||||
Intangible assets | | | | 147,000 | | | | | 147,000 | | | | | 147,000 | | | | | | 147,000 | | | | | 147,000 | | | | | 147,000 | | | ||||||
Policy loans | | | | 38,493 | | | | | 32,844 | | | | | 86,246 | | | | | | 158,667 | | | | | 32,844 | | | | | 86,246 | | | ||||||
Property and equipment | | | | — | | | | | — | | | | | 3,294 | | | | | | — | | | | | — | | | | | 3,294 | | | ||||||
Total deferred tax liabilities | | | | 2,022,888 | | | | | 377,721 | | | | | 353,683 | | | | | | 702,194 | | | | | 377,721 | | | | | 353,683 | | | ||||||
Net deferred tax assets | | | $ | — | | | | $ | — | | | | | — | | | | | $ | — | | | | $ | — | | | | | — | | | ||||||
|
| | Six months ended June 30, | | | Nine months ended September 30, | | ||||||||||||||||||||
| | 2020 | | 2019 | | | 2020 | | 2019 | | ||||||||||||||||
Computed expected income tax benefit | | | $ | 1,238,695 | | | | $ | (488,643) | | | | | $ | 339,987 | | | | $ | (813,759) | | | ||||
Increase (reduction) in income taxes resulting from: | | | | | | | | | | | | | | | | | | | | | | | ||||
State tax, net of federal benefit | | | | 151,680 | | | | | — | | | |||||||||||||||
Meals, entertainment and political contributions | | | | 2,930 | | | | | 5,636 | | | | | | 4,101 | | | | | 3,858 | | | ||||
Change in valuation allowance | | | | 21,682 | | | | | 266,607 | | | | | | 1,421,169 | | | | | 746,468 | | | ||||
COD Interest | | | | — | | | | | 177,563 | | | | | | — | | | | | 177,563 | | | ||||
Other | | | | (375,878) | | | | | 38,837 | | | | | | 228,173 | | | | | 512 | | | ||||
Subtotal of increases | | | | (351,266) | | | | | 488,643 | | | | | | 1,805,123 | | | | | 928,401 | | | ||||
Tax expense (benefit) | | | $ | 887,429 | | | | $ | — | | | | | $ | 2,145,110 | | | | $ | 114,642 | | |
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Computed expected income tax benefit | | | | $ | (1,154,890) | | | | | $ | (1,063,749) | | |
Increase (reduction) in income taxes resulting from: | | | | | | | | | | | | | |
Meals, entertainment and political contributions | | | | | 6,170 | | | | | | 8,402 | | |
Change in loss carryforward due to 382 limitation | | | | | — | | | | | | 5,595,636 | | |
COD Interest | | | | | 177,563 | | | | | | — | | |
Other | | | | | 8,613 | | | | | | 39,143 | | |
Subtotal of increases | | | | | 192,346 | | | | | | 5,643,181 | | |
Tax benefit before valuation allowance | | | | | (962,544) | | | | | | 4,579,432 | | |
Change in valuation allowance | | | | | 1,196,724 | | | | | | (4,579,432) | | |
Net income tax expenses | | | | $ | 234,180 | | | | | $ | — | | |
| | | June 30, 2020 | | | December 31, 2019 | | ||||||
Balance sheets: | | | | | | | | | | | | | |
Benefit and claim reserves ceded | | | | $ | 43,355,941 | | | | | $ | 30,579,524 | | |
| | | Six months ended June 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Statements of comprehensive (loss) income: | | | | | | | | | | | | | |
Premiums ceded | | | | $ | 453,108 | | | | | $ | 522,301 | | |
Benefits ceded | | | | | 47,078 | | | | | | 116,029 | | |
Commissions ceded | | | | | 5,721 | | | | | | 6,580 | | |
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
Balance sheets: | | | | | | | | | | | | | |
Benefit and claim reserves ceded | | | | $ | 42,091,115 | | | | | $ | 30,579,524 | | |
| | | Nine months ended September 30, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Statements of comprehensive (loss) income: | | | | | | | | | | | | | |
Premiums ceded | | | | $ | 677,702 | | | | | $ | 702,450 | | |
Benefits ceded | | | | | 99,466 | | | | | | 167,895 | | |
Commissions ceded | | | | | 7,595 | | | | | | 8,146 | | |
| | | December 31, 2019 | | | December 31, 2018 | | ||||||
Balance sheets: | | | | | | | | | | | | | |
Benefit and claim reserves ceded | | | | $ | 30,579,524 | | | | | $ | 23,100,644 | | |
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Statements of comprehensive income: | | | | | | | | | | | | | |
Premiums assumed | | | | $ | — | | | | | $ | 10,268 | | |
Premiums ceded | | | | | 996,711 | | | | | | 848,374 | | |
Benefits assumed | | | | | — | | | | | | 92,792 | | |
Benefits ceded | | | | | 201,823 | | | | | | 141,896 | | |
Commissions assumed | | | | | — | | | | | | 18 | | |
Commissions ceded | | | | | 10,445 | | | | | | 54,346 | | |
| | | December 31, 2019 | | | December 31, 2018 | | ||||||
Balance sheets: | | | | | | | | | | | | | |
Benefit and claim reserves ceded | | | | $ | 30,579,524 | | | | | $ | 23,100,644 | | |
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Statements of comprehensive income: | | | | | | | | | | | | | |
Premiums assumed | | | | $ | — | | | | | $ | 10,268 | | |
Premiums ceded | | | | | 996,711 | | | | | | 848,374 | | |
Benefits assumed | | | | | — | | | | | | 92,792 | | |
Benefits ceded | | | | | 201,823 | | | | | | 141,896 | | |
Commissions assumed | | | | | — | | | | | | 18 | | |
Commissions ceded | | | | | 10,445 | | | | | | 54,346 | | |
Reinsurer | | AM Best Rating | | Recoverable on Paid Losses | | Recoverable on Unpaid Losses | | Recoverable on Benefit Reserves/Deposit- type Contracts | | Ceded Due Premiums | | Total Amount Recoverable from Reinsurer | | | AM Best Rating | | Recoverable on Paid Losses | | Recoverable on Unpaid Losses | | Recoverable on Benefit Reserves/Deposit- type Contracts | | Ceded Due Premiums | | Total Amount Recoverable from Reinsurer | | ||||||||||||||||||||||||||||||||||||||||||
Ironbound Reinsurance Company Limited | | NR | | | $ | — | | | | $ | — | | | | $ | 7,323,291 | | | | $ | — | | | | $ | 7,323,291 | | | | NR | | | $ | — | | | | $ | — | | | | $ | 4,141,644 | | | | $ | — | | | | $ | 4,141,644 | | | ||||||||||||
Optimum Re Insurance Company | | A | | | | — | | | | | — | | | | | 518,692 | | | | | — | | | | | 518,692 | | | | A | | | | — | | | | | — | | | | | 524,701 | | | | | — | | | | | 524,701 | | | ||||||||||||
Sagicor Life Insurance Company | | A- | | | | — | | | | | 210,295 | | | | | 11,224,669 | | | | | 277,015 | | | | | 11,157,949 | | | | A- | | | | — | | | | | 89,179 | | | | | 11,200,888 | | | | | 286,028 | | | | | 11,004,042 | | | ||||||||||||
SDA Annuity & Life Re | | NR | | | | — | | | | | — | | | | | 3,995,718 | | | | | — | | | | | 3,995,718 | | | | NR | | | | — | | | | | — | | | | | 4,094,584 | | | | | — | | | | | 4,094,584 | | | ||||||||||||
SRC2 (Seneca Re protected cell) | | NR | | | | | | | | | | | | | | 5,108,908 | | | | | | | | | | 5,108,908 | | | ||||||||||||||||||||||||||||||||||||||||
US Alliance Life and Security Company | | NR | | | | — | | | | | — | | | | | 20,418,664 | | | | | 58,373 | | | | | 20,360,291 | | | | NR | | | | — | | | | | — | | | | | 17,281,555 | | | | | 64,319 | | | | | 17,217,236 | | | ||||||||||||
| | | | | $ | — | | | | $ | 210,295 | | | | $ | 43,481,034 | | | | $ | 335,388 | | | | $ | 43,355,941 | | | | | | | $ | — | | | | $ | 89,179 | | | | $ | 42,352,280 | | | | $ | 350,347 | | ��� | | | $ | 42,091,115 | | |
Reinsurer | | | AM Best Rating | | | Recoverable on Paid Losses | | | Recoverable on Unpaid Losses | | | Recoverable on Benefit Reserves/Deposit- type Contracts | | | Ceded Due Premiums | | | Total Amount Recoverable from Reinsurer | | |||||||||||||||
Ironbound Reinsurance Company Limited | | | NR | | | | $ | — | | | | | $ | — | | | | | $ | 4,213,699 | | | | | $ | — | | | | | $ | 4,213,699 | | |
Optimum Re Insurance Company | | | A | | | | | — | | | | | | — | | | | | | 489,770 | | | | | | — | | | | | | 489,770 | | |
Sagicor Life Insurance Company | | | A- | | | | | — | | | | | | 130,538 | | | | | | 11,347,962 | | | | | | 270,273 | | | | | | 11,208,227 | | |
SDA Annuity & Life Re | | | NR | | | | | — | | | | | | — | | | | | | 2,506,911 | | | | | | — | | | | | | 2,506,911 | | |
US Alliance Life and Security Company | | | NR | | | | | — | | | | | | 23,000 | | | | | | 12,207,079 | | | | | | 69,162 | | | | | | 12,160,917 | | |
| | | | | | | $ | — | | | | | $ | 153,538 | | | | | $ | 30,765,421 | | | | | $ | 339,435 | | | | | $ | 30,579,524 | | |
| | | | | | Nine months ended September 30, | | |||||||||
| | | | | | 2020 | | |||||||||
Reinsurer | | | Effective Date of Transaction | | | Ceding Commission Paid | | | Expense Allowances Paid(1) | | ||||||
Ironbound Reinsurance Company Limited | | | July 2019 | | | | $ | 688,110 | | | | | $ | 690,169 | | |
SDA Annuity & Life Re | | | November 2019 | | | | | 1,356,473 | | | | | | 2,605,014 | | |
US Alliance Life and Security Company(2) | | | April 2020 | | | | | 2,279,511 | | | | | | 4,016,556 | | |
SRC2 | | | July 2020 | | | | | 3,837,996 | | | | | | 7,247,966 | | |
| | | | | | | $ | 8,162,090 | | | | | $ | 14,559,705 | | |
|
| | | | | | Six months ended June 30, | | |||||||||
| | | | | | 2020 | | |||||||||
Reinsurer | | | Effective Date of Transaction | | | Ceding Commission Paid | | | Expense Allowances Paid(1) | | ||||||
Ironbound Reinsurance Company Limited | | | July 2019 | | | | $ | 688,110 | | | | | $ | 679,076 | | |
SDA Annuity & Life Re | | | November 2019 | | | | | 868,729 | | | | | | 1,628,850 | | |
US Alliance Life and Security Company(2) | | | April 2020 | | | | | 2,272,784 | | | | | | 4,009,102 | | |
| | | | | | | $ | 3,829,623 | | | | | $ | 6,317,028 | | |
| | Six months ended June 30, | | | Nine months ended September 30, | | ||||||||||||||||||||||||||||||||||||||||||||
| | 2020 | | | 2020 | | ||||||||||||||||||||||||||||||||||||||||||||
Reinsurer | | Gross Ceding Commission | | Expense Allowances(1) | | Interest on Ceding Commissions | | Earned Ceding Commission | | | Gross Ceding Commission | | Expense Allowances(1) | | Interest on Ceding Commissions | | Earned Ceding Commission | | ||||||||||||||||||||||||||||||||
Ironbound Reinsurance Company Limited | | | $ | 688,110 | | | | $ | 679,076 | | | | $ | 110,022 | | | | $ | 188,826 | | | | | $ | 688,110 | | | | $ | 690,169 | | | | $ | 165,607 | | | | $ | 316,889 | | | ||||||||
SDA Annuity & Life Re | | | | 868,729 | | | | | 1,628,850 | | | | | 29,527 | | | | | 18,341 | | | | | | 1,356,473 | | | | | 2,605,014 | | | | | 47,461 | | | | | 43,856 | | | ||||||||
US Alliance Life and Security Company(2) | | | | 2,272,784 | | | | | 4,009,102 | | | | | 7,711 | | | | | 10,465 | | | | | | 2,279,511 | | | | | 4,016,556 | | | | | 23,171 | | | | | 74,466 | | | ||||||||
SRC2 | | | | 3,837,996 | | | | | 7,247,966 | | | | | 13,251 | | | | | 54,838 | | | |||||||||||||||||||||||||||||
| | | $ | 3,829,623 | | | | $ | 6,317,028 | | | | $ | 147,260 | | | | $ | 217,632 | | | | | $ | 8,162,090 | | | | $ | 14,559,705 | | | | $ | 249,490 | | | | $ | 490,049 | | |
| | | | June 30, 2020 | | December 31, 2019 | | | | | September 30, 2020 | | December 31, 2019 | | ||||||||||||||||||
Reinsurer | | Effective Date of Transaction | | Deferred Ceding Commission | | Deferred Ceding Commission | | | Effective Date of Transaction | | Deferred Ceding Commission | | Deferred Ceding Commission | | ||||||||||||||||||
US Alliance Life and Security Company(1) | | September 2017 | | | $ | 834,487 | | | | $ | 858,675 | | | | September 2017 | | | $ | 822,393 | | | | $ | 858,675 | | | ||||||
Unified Life Insurance Company(1) | | July 2018 | | | | 304,007 | | | | | 582,894 | | | | July 2018 | | | | 287,189 | | | | | 582,894 | | | ||||||
Ironbound Reinsurance Company Limited(2) | | July 2019 | | | | 5,752,126 | | | | | 5,060,359 | | | | July 2019 | | | | 5,739,427 | | | | | 5,060,359 | | | ||||||
SDA Annuity & Life Re(2) | | November 2019 | | | | 2,156,377 | | | | | — | | | | November 2019 | | | | 2,071,427 | | | | | 1,076,267 | | | ||||||
US Alliance Life and Security Company(3) | | April 2020 | | | | 2,440,087 | | | | | 1,076,267 | | | | April 2020 | | | | 2,508,421 | | | | | — | | | ||||||
SRC2 | | July 2020 | | | | 4,310,407 | | | | | — | | | |||||||||||||||||||
| | | | | $ | 11,487,084 | | | | $ | 7,578,195 | | | | | | | $ | 15,739,264 | | | | $ | 7,578,195 | | |
Date of Loan | | | Loan Principal Amount | | | Shares of Common Stock into which Loans Were Converted | | ||||||
June 28, 2018 | | | | $ | 500,000 | | | | | | 24,284,825 | | |
June 28, 2018 | | | | | 100,000 | | | | | | 4,856,965 | | |
October 10, 2018 | | | | | 1,000,000 | | | | | | 48,569,650 | | |
December 7, 2018 | | | | | 17,500,000 | | | | | | 849,968,875 | | |
Total | | | | $ | 19,100,000 | | | | | | 927,680,315 | | |
|
Date of Loan | | | Loan Principal Amount | | | Shares of Common Stock into which Loans Were Converted | | ||||||
June 28, 2018 | | | | $ | 500,000 | | | | | | 48,570 | | |
June 28, 2018 | | | | | 100,000 | | | | | | 9,714 | | |
October 10, 2018 | | | | | 1,000,000 | | | | | | 97,139 | | |
December 7, 2018 | | | | | 17,500,000 | | | | | | 1,699,938 | | |
Total | | | | $ | 19,100,000 | | | | | | 1,855,361 | | |
| | | 2020 Stock Options Outstanding | | | 2019 Stock Options Outstanding | | ||||||
Non-vested at December 31, 2019 | | | | | 17,900 | | | | | | 17,900 | | |
Granted | | | | | 32,967 | | | | | | — | | |
Forfeited | | | | | (3,350) | | | | | | — | | |
Vested | | | | | (200) | | | | | | | | |
Non-vested at September 30, 2020 | | | | | 47,317 | | | | | | 17,900 | | |
| | | June 30, 2020 | | | December 31, 2019 | | ||||||
Beginning balance | | | | $ | 171,168,785 | | | | | $ | 7,234,927 | | |
US Alliance | | | | | 398,623 | | | | | | 657,986 | | |
Deposits received | | | | | 147,486,013 | | | | | | 161,392,700 | | |
Investment earnings (includes embedded derivative) | | | | | 3,436,491 | | | | | | 2,043,762 | | |
Withdrawals | | | | | (658,936) | | | | | | (160,590) | | |
Ending balance | | | | $ | 321,830,976 | | | | | $ | 171,168,785 | | |
|
| | | September 30, 2020 | | | December 31, 2019 | | ||||||
Beginning balance | | | | $ | 171,168,785 | | | | | $ | 7,234,927 | | |
US Alliance | | | | | 547,193 | | | | | | 657,986 | | |
Deposits received | | | | | 279,537,157 | | | | | | 161,392,700 | | |
Investment earnings (includes embedded derivative) | | | | | 5,910,237 | | | | | | 2,043,762 | | |
Withdrawals | | | | | (1,718,288) | | | | | | (160,590) | | |
Contract changes | | | | | (15,700) | | | | | | — | | |
Ending balance | | | | $ | 455,429,384 | | | | | $ | 171,168,785 | | |
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Beginning balance | | | | $ | 7,234,927 | | | | | $ | 8,314,297 | | |
US Alliance | | | | | 657,986 | | | | | | 804,187 | | |
Commutation of assumption agreement | | | | | — | | | | | | (1,881,411) | | |
Ironbound Reinsurance Company Limited | | | | | 1,839,551 | | | | | | — | | |
SDA Annuity & Life Re (includes MVA adjustment and embedded derivative) | | | | | 194,940 | | | | | | — | | |
Deposits received | | | | | 161,392,700 | | | | | | 650 | | |
Investment earnings (includes MVA adjustment and embedded derivative) | | | | | 9,271 | | | | | | 47,936 | | |
Withdrawals | | | | | (160,590) | | | | | | (50,732) | | |
Ending balance | | | | $ | 171,168,785 | | | | | $ | 7,234,927 | | |
Leases | | | Classification | | | As of September 30, 2020 | | | As of December 31, 2019 | | ||||||
Assets | | | | | | | | | | | | | | | | |
Noncurrent: | | | | | | | | | | | | | | | | |
Finance | | | Office and other equipment, net of accumulated depreciation and amortization | | | | $ | — | | | | | $ | 2,913 | | |
Operating | | | Operating lease right-of-use assets | | | | | 378,682 | | | | | | 470,132 | | |
Total leased assets | | | | | | | $ | 378,682 | | | | | $ | 473,045 | | |
Liabilities | | | | | | | | | | | | | | | | |
Current: | | | | | | | | | | | | | | | | |
Finance lease | | | Finance lease liabilities | | | | $ | — | | | | | $ | 1,860 | | |
Noncurrent: | | | | | | | | | | | | | | | | |
Operating lease | | | Operating lease liabilities | | | | | 428,851 | | | | | | 524,248 | | |
Total leased liabilities | | | | | | | $ | 428,851 | | | | | $ | 526,108 | | |
| | | | | | Nine months ended September 30, | | |||||||||
Leases | | | Classification | | | 2020 | | | 2019 | | ||||||
Operating | | | General and administrative expense | | | | $ | 6,654 | | | | | $ | 10,453 | | |
Finance lease cost: | | | | | | | | | | | | | | | | |
| | | Amortization expense | | | | | 2,913 | | | | | | 8,739 | | |
| | | Interest expense | | | | | 111 | | | | | | 333 | | |
| | | Operating Leases | | |||
2020 (excluding nine months ended September 30,2020) | | | | $ | 40,345 | | |
2021 | | | | | 164,081 | | |
2022 | | | | | 156,608 | | |
2023 | | | | | 161,674 | | |
2024 | | | | | 13,508 | | |
Total remaining lease payments | | | | $ | 536,216 | | |
|
Leases | | | Classification | | | As of June 30, 2020 | | | As of December 31, 2019 | | ||||||
Assets | | | | | | | | | | | | | | | | |
Noncurrent: | | | | | | | | | | | | | | | | |
Finance | | | Office and other equipment, net of accumulated depreciation and amortization | | | | $ | — | | | | | $ | 2,913 | | |
Operating | | | Operating lease right-of-use assets | | | | | 409,165 | | | | | | 470,132 | | |
Total leased assets | | | | | | | $ | 409,165 | | | | | $ | 473,045 | | |
Liabilities | | | | | | | | | | | | | | | | |
Current: | | | | | | | | | | | | | | | | |
Finance lease | | | Finance lease liabilities | | | | $ | — | | | | | $ | 1,860 | | |
Noncurrent: | | | | | | | | | | | | | | | | |
Operating lease | | | Operating lease liabilities | | | | | 460,791 | | | | | | 524,248 | | |
Total leased liabilities | | | | | | | $ | 460,791 | | | | | $ | 526,108 | | |
| | | | | | Six months ended June 30, | | |||||||||
Leases | | | Classification | | | 2020 | | | 2019 | | ||||||
Operating | | | General and administrative expense | | | | $ | 4,577 | | | | | $ | 7,109 | | |
Finance lease cost: | | | | | | | | | | | | | | | | |
| | | Amortization expense | | | | | 2,913 | | | | | | 5,827 | | |
| | | Interest expense | | | | | 111 | | | | | | 222 | | |
| | | Operating Leases | | |||
2020 (excluding six months ended June 30,2020) | | | | $ | 90,167 | | |
2021 | | | | | 164,081 | | |
2022 | | | | | 156,608 | | |
2023 | | | | | 161,674 | | |
2024 | | | | | 13,508 | | |
Total remaining lease payments | | | | $ | 586,038 | | |
| | Six months ended June 30, | | | Nine months ended September 30, | | ||||||||||||||||||||
| | 2020 | | 2019 | | | 2020 | | 2019 | | ||||||||||||||||
Cash payments | | | | | | | | | | | | | | | | | | | | | | | ||||
Operating cash flows from operating leases | | | $ | (1,035) | | | | $ | 42 | | | | | $ | (1,035) | | | | $ | (148) | | | ||||
Operating cash flows from finance leases | | | | 4,657 | | | | | 2,328 | | | | | | 4,657 | | | | | 2,328 | | | ||||
Financing cash flows from finance leases | | | | (111) | | | | | (222) | | | | | | (111) | | | | | (333) | | |
| | As of June 30, 2020 | | As of December 31, 2019 | | | As of September 30, 2020 | | As of December 31, 2019 | | ||||||||||||||||
Weighted Average Remaining Lease Term | | | | | | | | | | | | | | | | | | | | | | | ||||
Finance lease | | | | — | | | 3 months | | | | | — | | | 3 months | | ||||||||||
Operating lease | ��� | | 2 years | | 2.5 years | | | 1.7 years | | 2.5 years | | |||||||||||||||
Weighted Average Discount Rate | | | | | | | | | | | | | | | | | | | | | | | ||||
Finance lease | | | | 0% | | | | | 6% | | | | | | 0% | | | | | 6% | | | ||||
Operating lease | | | | 8% | | | | | 8% | | | | | | 8% | | | | | 8% | | |
Leases | | | Classification | | | As of December 31, 2019 | | | As of December 31, 2018 | | ||||||
Assets | | | | | | | | | | | | | | | | |
Noncurrent: | | | | | | | | | | | | | | | | |
Finance | | | Office and other equipment, net of accumulated depreciation and amortization | | | | $ | 2,913 | | | | | $ | 14,564 | | |
Operating | | | Operating lease right-of-use assets | | | | | 470,132 | | | | | | 592,065 | | |
Total leased assets | | | | | | | $ | 473,045 | | | | | $ | 606,629 | | |
Liabilities | | | | | | | | | | | | | | | | |
Current: | | | | | | | | | | | | | | | | |
Finance lease | | | Finance lease liabilities | | | | $ | 1,860 | | | | | $ | 9,299 | | |
Noncurrent: | | | | | | | | | | | | | | | | |
Operating lease | | | Operating lease liabilities | | | | | 524,248 | | | | | | 646,519 | | |
Total leased liabilities | | | | | | | $ | 526,108 | | | | | $ | 655,818 | | |
| | | | | | Year ended December 31, | | |||||||||
Leases | | | Classification | | | 2019 | | | 2018 | | ||||||
Operating | | | General and administrative expense | | | | $ | 13,797 | | | | | $ | 16,810 | | |
Finance lease cost: | | | | | | | | | | | | | | | | |
| | | Amortization expense | | | | | 11,651 | | | | | | 4,481 | | |
| | | Interest expense | | | | | 444 | | | | | | 444 | | |
| | | Operating Leases | | | Finance Lease | | ||||||
2020 (excluding year ended December 31, 2019) | | | | $ | 160,958 | | | | | $ | 2,133 | | |
2021 | | | | | 164,081 | | | | | | — | | |
2022 | | | | | 156,608 | | | | | | — | | |
2023 | | | | | 161,674 | | | | | | — | | |
2024 | | | | | 13,508 | | | | | | — | | |
Total remaining lease payments | | | | $ | 656,829 | | | | | $ | 2,133 | | |
|
| | | Operating Leases | | | Finance Lease | | ||||||
2020 (excluding year ended December 31, 2019) | | | | $ | 160,958 | | | | | $ | 2,133 | | |
2021 | | | | | 164,081 | | | | | | — | | |
2022 | | | | | 156,608 | | | | | | — | | |
2023 | | | | | 161,674 | | | | | | — | | |
2024 | | | | | 13,508 | | | | | | — | | |
Total remaining lease payments | | | | $ | 656,829 | | | | | $ | 2,133 | | |
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Cash payments | | | | | | | | | | | | | |
Operating cash flows from operating leases | | | | $ | (337) | | | | | $ | 4,306 | | |
Operating cash flows from finance leases | | | | | 4,657 | | | | | | (2,514) | | |
Financing cash flows from finance leases | | | | | (444) | | | | | | (444) | | |
| | Amount* | | | Amount* | | ||||||||
Securities and Exchange Commission Registration Fee | �� | | | $ | 5,455 | | | | | $ | 5,455 | | | |
FINRA Filing Fee | | | | ** | | | | | | 8,000* | | | ||
Printing and Engraving Expenses | | | | ** | | | | | | 50,000* | | | ||
Accounting Fees and Expenses | | | | ** | | | | | | 75,000* | | | ||
Legal Fees and Expenses | | | | ** | | | | | | 250,000* | | | ||
Miscellaneous | | | | ** | | | | | | 25,000* | | | ||
Total | | | $ | ** | | | | | $ | 413,455* | | |
| Signature | | | Title | |
| /s/ Michael Minnich Michael Minnich | | | | |
| /s/ A. Michael Salem A. Michael Salem | | | Co-Chief Executive Officer and Director | |
| /s/ Debra K. Havranek Debra K. Havranek | | | Vice President, Treasurer, Principal Financial and Accounting Officer | |
| |||||
Douglas Bratton | | | Director | | |
| Firman Leung | | | Director | |
| John T. Hompe | | | Director | |
| Sachin Goel | | | Director | |
| Jack Theeler | | | Director | |
| *By: /s/ A. Michael Salem A. Michael Salem Attorney-in-Fact | | |
Exhibit No. | | | Description | |
14.1 | | | Code of Ethics (Incorporated by reference to Exhibit 14.1 to the Company’s Form 10-K, filed April 2, 2012.) | |
21.1** | | | List of Subsidiaries. | |
23.1* | | | Consent of Mazars USA LLP | |
23.2* | | | Consent of RSM US LLP | |
23.3*** | | | Consent of Jones & Keller, P.C. is included in the opinion of Jones & Keller, P.C. filed as Exhibit 5.1. | |
24** | | | Power of Attorney (see Signature Page following page II-3 to the original filing of this registration statement on Form S-1 filed on November 3, 2020.) | |
101.INS* | | | XBRL Instance Document | |
101.SCH* | | | XBRL Taxonomy Extension Schema Document | |
101.CAL* | | | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB* | | | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | | | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF* | | | XBRL Taxonomy Extension Definition Linkbase Document | |